nnaniki malesa cpa article
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COURSE: STRATEGIC MARKETING THEORY
CODE: BUSA7078
STUDENT NO: 9506134M
SUBMISSION: INDIVIDUAL ASSIGNMENT
DATE: 2012 MARCH 27
TITLE
Vulnerable Consumers in Developing Countries: Toward aresponsible and sustainable marketing approach
KeywordsSubjective World Paradigm, Vulnerable Consumers,
Responsible Marketing, Developing countries, SouthAfrica, Sports Sponsorships
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CONTENTS PAGE
1. ABSTRACT 1
2. INTRODUCTION 2
3. DEFINING THE SUBJECTIVE WORLD PARADIGM 3
3.1 DEFINITION OF VULNERABLE CONSUMERS 5
3.2 BOTTOM OF THE PYRAMID AND VULNERABLE CONSUMER 6
4. MARKETING AND VULNERABLE CONSUMERS 8
4.1 SPORTS EVENTS SPONSORSHIPS
BY ALCOHOL, FAST-FOOD AND TOBACCO COMPANIES 8
5. CONSUMER PROTECTION LEGISLATION IN SOUTH AFRICA 11
6. IMPLICATIONS FOR MARKETERS 13
7. CONCLUSION 15
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1. ABSTRACT
Brenkert (1998) defines a vulnerable consumer as a consumer who is likely to be
harmed because what they want, unfairly harms them. Within developing markets, such
a consumer has often denoted one who is also of poor means economically, aptly
referred to as the Bottom of the Pyramid consumer (Prahalad, 2004).
The continued interest by marketers, within developing markets, to pursue their profit-
centric strategies has largely in the interest of their businesses (Surujlal (etal 2009).
The taking advantage of a vulnerable consumer who is unable to distinguish right from
wrong in consumption has enabled these marketers to truly achieve their sales whilst
leaving this consumer harmed.
It is in fact, in the presence of Consumer Protection Laws, that the said vulnerable
consumer has been able to now be allowed to operate within a fair marketplace (Wright,
2008). In particular, South Africa - an example of a country with a demographic profile of
an audience large in vulnerable consumers, has to date introduced a number of
Consumer Protection legislations to create a less-vulnerable marketplace for these
consumers inclusive of the Consumer Protection Act of 2008, the Labelling Laws as well
as Credit Act of 2005.
However, while the Consumer Protection Legislations plan is to serve the consumers
interests, their plans to do so will only become real when court challenges are lodged
through intensified and vigilant activism (Gabriels, Lambert, Smith and Hiss, 2011).
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2. INTRODUCTION
In pursuit of driving profits of goods and services sold, businesses in South Africa have
bent the rules of ethical protocol at the expense of the consumer who is being sold
those goods and services (Brenkert, 1998). This, done by taking advantage of a
consumer base unable to distinguish right from wrong in consumption of products
marketed to them (Panday, Richter and Bhana 2006; Surujlal, Shaw & Shaw, 2007;
Surujlal and Dhurup, 2009). It is such behaviour which has raised a question regarding
ethical marketing behaviour by these marketers.
This paper will aim to answer the question of: should consumers in developing
countries be considered as vulnerable and consequently be protected by legal
measures or regulations. Three key objectives will deliver the above-said argument
using research-centric proof to unpack that:
Firstly, an outline of the Subjective World Paradigm and the Psychological base of
marketing a framework for clear understanding of the existence of a vulnerable
consumer found in developing countries.
Secondly, the negative impact, to the vulnerable consumer, of the absence ofConsumer Protection Legislations in developing countries given marketers
questionable and unethical marketing activities when selling their products within
developing markets.
Thirdly, the role of Consumer Protection Laws, especially in developing countries, in
establishing ethical codes of conduct which protect vulnerable consumers from
marketers activities.
The paper will conclude with implications going forward in ensuring a more vigilant
approach towards the adherence, maintenance as well as monitoring of the established
laws.
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3. DEFINING THE SUBJECTIVE WORLD PARADIGM
Marketing theory applicable to laying the definitive understanding of the marketing
system in which vulnerable consumers are rooted in, is the Subjective World Paradigm
(Arndt, 1995). Marketing Theory, here refers to a framework which allows for a more
intelligible as well as visual understanding of the entire marketing process under which
these types of consumers operate in (Baker and Saren, 2010).
Prior to unpacking what this paradigm or alternative view of the world refers to, it is
imperative that the definition of paradigm is also brought to fore. Paradigm, herein,
refers to a shared assumption or a theory agreed upon. It should also be mentioned,
that a noticeable trend with respects to paradigms has been noted with some seen
some taking centre stage in dominance or prevalence until they are challenged
successfully by a competing paradigm (Harker and Egan, 2006).
As such, the Subjective World Paradigm was borne out of its shared relations with the
Interpretive Paradigm which was formulated in the 1980s (Arndt, 1995). The latter, the
Interpretive Paradigm, emphasises a presentation of a reality of a world whose focus is
on trying to understand consumers experiences more so around what they subjectively
experience in their minds during consumption (Szmigin and Foxall, 2000). Theimportance of the consumers experience as being-in-the-world is cemented in the
belief of this Interpretive Paradigm construct in ensuring that the thorough
understanding of consumers personal experiences or experienced knowledge serves
as scientific data (Szmigin etal, 2000).
Arndt (2005) took this definition further in emphasising that it is truly the subjective as
well as intersubjective experiences of individuals that form the basis of understanding
marketing behaviour within this Subjective World paradigm. Lastly, in encapsulating the
sentiments of engaging with these consumers as opposed to being detached outside
observers, Ardnt (2005) surmised that only when there is a give-and-take connection
with the audience of interest will marketing behaviour of such an audience be truly
understood.
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The consumer in question under this paradigm needs to also be clearly described. The
use of metaphors in describing the consumers is believed to help influence the
framework of analysis adopted, in this instance that of the Subjective World Paradigm.
The consumer then is referred in visualry terms of an experiencing man metaphor in
drawing even closer the emphasis of the value of everyday experiences for a consumer
within this paradigm. The value of such a metaphor for marketing behaviour is in
enabling marketers to continuously remember that much of human behaviour is driven
by the different situations largely attributed to what is stored in their memories in the
form of images, dreams and events, to name but a few (Arndt, 1995).
Related to the value of images in the behaviour of consumers, Arndt (2005) also utilises
the metaphor of language and text to verify the behaviour of consumers within this
paradigm. This metaphor, in marketing behaviour is used in involving individuals to think
aloud as they engage in various decisions pertaining to their consumption activities.
Pertinent to this paper, over and above the cited metaphors, is Arndts defining the
consumer within this paradigm as being vulnerable. In conjunction with the focal interest
of the consumer within this paradigm, the Psychological basis of marketing lends itselfto a relationship within this paradigm ( (Szmigin etal, 2000). The interest to engage with
consumers in understanding their consumption experiences encapsulates the very
definition of Psychology as a discipline of marketing. Psychology, is defined as a study
about the behaviour and mental processes of consumers (Baker and Saren, 2010). The
Psychological basis of marketing, in turn, according to Baker etal (2010), emphasises
that psychology provides insight into customer behaviour. Such insights, these writers
argue, enable more decisive and informative marketing management decisions and
actions made during marketing plans formulations.
A birds eye view of the role of decision-making as an example for understanding how
the discipline of marketing is psychological, is worthy of noting. Here marketers
understanding of the cognitive process by which consumers follow in making
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judgements has allowed the discipline to understand the decision making processes of
consumers before they make purchases. Research has noted that this is done through
the 5 decision-making stages, influenced by exposure to internal as well as external
stimuli largely brought to fore by marketers marketing activities (Szmigin etal, 2000). In
relating our earlier definition of the paradigm where language and text play a role in the
consumption patterns of consumers behaviour, the role of psychology in influencing
decisions on what is consumed and consumption patterns cis therefore undeniable.
It is within this framework of a paradigm that the definition of a vulnerable consumer is
explored in relation to the Psychological discipline of marketing.
1.1 DEFINITION OF VULNERABLE CONSUMERS
Brenkert (1998) defines a vulnerable consumer as a consumer who is likely to be
harmed because what they want, unfairly harms them. It is imperative at this juncture,
that clarity be brought to fore in distinguishing a Disadvantaged consumer from a
Vulnerable one.
Brenkert (1998) clarifies that a disadvantaged consumer is one who is perceived so
because they are unable to compete fairly with others in the marketplace in pursuit ofdesired product. A vulnerable consumer, on the other hand, is not vulnerable in relation
to others who are competing for a similarly desired product; but rather from the harm
they may be subjected to because of those who market the products to them (Brenkert,
1998).
(Note to avoid saying products and services each time, we use the term products to
fully represent products which may be physical products, services or ideas)
The construct of vulnerable consumers has also started to be used in enabling a better
understanding of the processes of change and how these affect consumers at large
(SA Governments Poverty and Inequality Report, 1996). Here vulnerability of
consumers, as a construct is extended further to include not just those who lack assets
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but rather also those who are in possession of assets and are unable to cope in times of
financial crisis in managing those assets.
Whilst, it is recognised that irrespective of ones level of income, as human beings we
all need to consume, Subrahmanyan and Gomez-Arias, 2008 cite examples where
luxury products have been consumed by the poor who logically would not have been
able to afford these products have been noted. Such examples, Subrahmanyan etal
(2008) surmises, give reason to raise the ethical concerns of manipulation of consumers
by marketers when selling products to them. It also in turn raises ethical concerns of
the vulnerability of these consumers in acquiring those products even when they are
harmed financially.
It is on the basis of this reasoning of vulnerability of consumers, as a construct denoting
consumption by the poor, that we explore further the definition of vulnerable consumers
within the profiling of the Bottom of the Pyramid consumer base Prahalads (2004).
1.2 BOTTOM OF THE PYRAMID AND VULNERABLE CONSUMERS
Globally, Bottom of the Pyramid is denoted as a consumer base of 4 - 5 billion people
(Prahald, 2004) with a purchasing power of $5 trillion (Subrahmanyan et al 2008).Subrahmanyan et al (2008) also terms this consumer base as the poorest of the world
in surmising on the economical term thereof of the Bottom of the Pyramid.
Marketers and their respective firms have continuously been warned in making sure that
they fully understand the demographics of this audience prior to engaging them in
pursuing profit-centric strategies to them (Pita, Guesalaga and Marshall, 2008)
That said, contrary argument on why marketers should not pursue such profit-centric
strategies of selling into this market has been highlighted by Pita etal (2008). Pita etal
(2008) cite that this is an audience base whose incomes consumption resides mostly
on spending in basic necessities namely food, clothing and fuel and with 80% of
spending on these 4 basic necessities, it is not an economically viable opportunity to
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pursue. It is such debates which bring to fore, if anything, the undeniable existence of
an audience that is poor and susceptible to marketing initiatives harming them because
of their vulnerable status quo. South Africa, is one such country delineating audience
profiling of Bottom of the Pyramid consumer base.
In 2011, the South African population (Statistics SA, 2011) was estimated to be between
50 59 million people. The population of the country depicted approximately the
gender, racial as well as age percentage breakdown as half of the population being
female (52%); over three quarters of the population being black (79,5%) with a youthful
population of approximately 70% (32m) under the age of 35.
Whilst the average income, calculated at GDP divided by total population, places South
Africa at the level of an upper middle income country, the widespread of poverty
nationally paints a different picture (SASSA, 2012). South Africa is recorded as having
some of the highest levels of disparate income, racial and gender inequalities as a
legacy of the apartheid era. Inequality, here, has been defined as any form of
deprivation, and although separate from, is related to the experience of poverty
(SASSA, 2012). Some of the factors contributing to income inequality in South Africa
include intellectual ability; access to education and training, discrimination, and unequaldistribution of wealth (Rensburg, McConnell and Brue, 2011).
As such, the resultant inequality between races and the widening gap between the rich
and the poor has seen at least 40-50% of the South African population living without
adequate means of survival (Wilson, 2011). 18m South Africans live in the poorest 40%
of the households resulting in them being classed as poor. The majority of the poor are
found in rural areas and the Poverty rate for these rural areas is 71%. A measure of
inequality as depicted by the Gini Coefficient, depicts a 0,58 measure for South Africa,
one of the the highest in the world. This is attributed to the fact that 11% of total income
come from the 40% poorest households whilst over 40% of the total income comes from
7% of the population, confirmed to be of a rich status (Wilson, 2011).
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In spite of persistent arguments regarding the economically viability of pursuing
developing markets like South Africa, this has not stopped marketers from pursuing
these markets. To date their strategies within these markets dictated a behaviour intent
on taking advantage of a consumer base unable to distinguish right from wrong in
consumption of products marketed to them (Panday, Richter and Bhana 2006; Surujlal,
Shaw & Shaw, 2007; Surujlal and Dhurup, 2009).
A closer look at South Africas landscape of marketing activities in the absence of
Consumer Protection Laws, revealed ethically questionable marketing behaviour
towards a vulnerable base of consumers (Surujlal and Dhurup, 2009).
4. MARKETING AND VULNERABLE CONSUMERS:
In sketching out the impact of marketing activities on the vulnerable consumers within a
developing country like South Africa, the paper will zero in on 2 key arguments. Firstly, a
portrayal of how businesses in South Africa, in their pursuit to profitably market products
produced to vulnerable consumers, have acted in their own interests. Secondly, the
noticeably lacking or questionable ethics in the delivery of these products to these
consumers by these businesses in South Africa.
4.1 SPORTS EVENTS SPONSORSHIPS BY ALCOHOL, FAST-FOOD AND
TOBACCO COMPANIES
Public health continues to be concerned about how sports sponsorships has been
used by tobacco, alcohol as well as fast-food products as one of the tools to penetrate
the vulnerable consumers (Surujlal and Dhurup, 2009).
Surujlal etal (2009) argues that creating brand or company awareness as well as
reinforcing images as well as brand building have been the key reasons why marketers
have pursued sports sponsorships. The intent here is in ensuring that, through sports
events sponsored by these marketers, emotional bonds as well as loyalty are created
within their targeted audience (Surujlal (etal 2009)).
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It is befitting to surmise that marketers see sponsorship relationships as effective
methods to shape consumers attitudes - this thus speaking to the heart of the use of
psychology in the discipline of marketing.
The question regarding the morality of the relationship in sporting events and
sponsorships by alcohol, soft-drink and fast-food companies needs further discussing.
Surujlal etal (2009) firstly confirms the existence of a relationship between sporting
events and unhealthy products such as tobacco, alcohol and fast-food in the
consumers minds. Ambler (1996), confirms that the usage of such sponsorship vehicle
to promote messages of unhealthy products to these vulnerable consumers has
resulted in consumption of brands promoted. In turn, Ambler (1996) argues, these
consumers have been noticeably unable to disseminate right from wrong consumption
of the brands they were exposed to.
In fact in research conducted by Markinor, a research agency, highlighted that 59% of
metropolitan dwellers held the belief that liquor companies who sponsored sports
events, contribute positively to their respective communities (Editorial,1995). Inaddition, Surujlal etals (2009) survey on respondents view of whether alcohol
companies make appropriate sponsors for sport events, revealed their favouring of
these sponsorships. Surujlal etal (2009) argues that respondents answers were driven
by the fear that banning of such events may mean loosing out on certain sport events
as well as the fun and entertainment associated with sports events.
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There is also serious hypocrisy of linking health benefits, as promoted through sport, in
spite of the knowledgeable detrimental effects of smoking, drinking and consuming
unhealthy fast foods, argues Surujlal etal (2009). The impact of such sponsorships
being viewed by (or exposed to) vulnerable consumers who are in fact underage is
also negatively impacting on the future consumption habits of these consumers
(Editorial, 1995). The tactic of sponsoring grass root and community events by these
companies has also been seen as a tactic of exploiting the popularity of sport to target
children and young people whilst bypassing advertising regulations Surujlal etal (2009)
disputed.
The strategy used by fast-food outlets is similar to the one used by tobacco since both
are targeting young people whilst denying the harmful effects of their products to this
vulnerable consumer Surujlal etal (2009). Again, international studies conducted have
documented strong relationship between smoking of cigarettes by school-going
children and the likely incremental usage of alcohol as well as that of strong drugs by
these kids. According to the research, cigarette smoking girls of a school-going age
were 16 times (7 times more likely for boys) more likely to use stronger drugs and six
times (5 times more likely for boys) more likely to use alcohol than their non-smoking
school peers (Editorial, 1995).
Marketers, on the other hand, myopically conclude that through sporting events
sponsorships they drive the positioning of positive associations between say for
example drinking alcohol and traits associated with athletes and teams such as
success, health fitness and fun. Marketers of sports sponsorships of fast-food also
argued that there are positive associations through such marketing between physical
activity as a desirable intent to avoiding obesity. Yet, it is in fact physical activity as well
as a healthy dietary routine that will result in obesity avoidance (Surujlal etal (2009))
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Whilst legislative approach is currently in place with respects to tobacco advertising
(inclusive of sponsorships curtailing); the ethical question with respects to
sponsorships by alcohol as well as fast-food companies remains. The debate around
the banning of alcohol advertising and desirable intents to reduce operating hours of
outlets selling the category are initiatives displaying the growing public health concern
towards this category. The global rise of obesity among the children, and predictions
that obesity will become more damaging to the economy than smoking (Surujlal, Shaw
& Shaw, 2007) mandates strong legislature. This need is also emphasised strongly by
the likely impact of life expectancy on children of today if the current obesity trends
continue (ABC News, 2008).
Lastly, there is another ethical question mandating addressing by tobacco companies
usage of below-the-line advertising (Panday, Richter and Bhana 2006). The
promulgation of the Tobacco Products Amendment Act of 1999s banning of advertising
and promotion of tobacco with the intent of protecting young people from the harms of
tobacco use is commendable. This, however, has not stopped the tobacco companies
from targeting this vulnerable consumers through indirect advertising, a key loophole
not addressed in the law (Panday, Richter and Bhana 2006). The use of nightclubs,
bars as well as social networks to invite affluent young adults promoting trendylifestyles has become the companies way of advertising, still. The argument by the
companies is that, these are private parties strictly attended only through invitations as
sent through social networks. Whilst the law will close this loophole, Panday etal
(2006) argues that the public health advocates need to continue to be wary of tobacco
companies promises of weve changed.
5. CONSUMER PROTECTION LEGISLATION IN SOUTH AFRICA
The Introduction of the Consumer Protection Act (herein referred to as the CPA), which
became effective on 31 March 2011, was thus intended to provide a legislation aimed at
protection all consumers, yet with a specific focus on the vulnerable
consumers (Wright, 2008).
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Deemed the first legislation of its kind in South Africa, the Act is truly a comprehensive
framework which outlines the rights of consumes whilst visibly enforcing the legislation
around the accountable conduct of suppliers. Chapter 2 of the Act outlines clearly 9
consumer sights enforced upon suppliers. The need for companies to review their
conduct around marketing initiatives such as implementation of direct marketing, fair
and responsible marketing, bait marketing; negative option marketing; catalogue
marketing; driving promotional competitions as well as customer loyalty programmes
has never been more urgent (Buys, 2011).
In surmising the Acts purpose - it is clear that the intent is to provide a fair marketplace
for vulnerable consumers so that the disadvantages they have experienced to date are
reduced. In turn, it is also to ensure that there is responsible consumer behaviour by
suppliers ensuring dutiful empowerment by consumers and a platform for correcting
unlawful unfair trade practices towards these consumers (Wright, 2008). It is in the
pursuit of such responsible marketing and accountability that the CPA duly rests.
Responsible marketing is defined as the socially conscious marketing where focus is
on reviewing the negative effects of marketing activities of a company on its society to
date with the intent of mitigating those effects (Wood, Pitta and Franzak, 2008: #427).
The Protection of Personal Information Bill of 2009 , herein referred to as POPI Bill, is
another piece of legislation which will regulate the right to privacy even further of the
South Africa consumers. The Bill which is currently in front of parliament, is intended to
regulate marketing when it comes to unsolicited electronic communications. Section 67
thereof , argues Buys (2011), will govern the legislative use of directories such as
name, addresses and contact details of individuals. In essence the POPI Bill, repeals
the spamming provisions contained in Section 45of the Electronic Communications and
Transactions Act of 2002 (Buys, 2011).
The introduction of the National Credit Act (2005) and Regulations (2006), to legislate
consumer credit law whilst creating a single system to regulate credit, is another piece
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of legislation in the interests of vulnerable consumers (Renke, Roestoff and Haupt,
2007). Jacobs and Smits (2010) portrayal of growing levels of indebtedness by 44%
between 1994 and 2008 against declines in household savings affirm the need for
implementation of such a legislation. In fact, the rise in this debt, was noted by Jacobs
etal (2010) as incurred by low-income earners, herein defined as the vulnerable
consumers in South Africa who make up 75% of the South African population (IFC,
2007: #19). Businesses, according to Jacobs etal (2010) have been looking for
opportunities, particularly in low-income markets where the aspiration to consume has
shown rapid growth and the rise in consumption is indicative of businesses taking
advantage of such opportunities.
With the introduction of the Act, reckless credit granting as well as the regulation of
credit information are being addressed whilst ensuring that debt re-organisation in
cases of over-indebtness is also managed (Renke etal 2007). Responsible lending is
then duly implemented by creating a balance between providing access to credit whilst
simultaneously preventing reckless lending of credit to consumers not financially fit
(Hawthorne, 2007).
South African Food Labelling Regulations has also continued to be amendedaccordingly to account for the need of regulations in the ease of labelling of products for
consumers benefit (de Villiers, 2008). To date companies continue deploy marketing
strategies that are misleading the consumers with false claims with respects to what
their products contain, as highlighted on the labels of the products. Greater vigilance
and activism is still needed though in ensuring legislation adherence by companies
when it comes to labelling of products though.
6. IMPLICATIONS FOR MARKETERS
Brenkert (1998) outlined the need for a policy, a code of conduct, which holds
marketers accountable in their dealings with consumers.
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The consequent legislating of the marketing activities in South Africa, is a first step
towards such as it is beginning to dictate a change in the dynamics of the marketing
place. From the restriction by marketers to actively promote their products to children
(herein referred to as kids under 12) to the inability by marketers to entice consumers
with products they do not need nor want nor able to afford; the legislations framework is
a sure protection for the vulnerable consumers.
However, while the CPAs plan is to serve the consumers interests, its plan to do so will
only become real when court challenges are lodged through intensified and vigilant
activism (Gabriels, Lambert, Smith and Hiss, 2011). The ethically questionable sports
events sponsoring of Alcohol and Fast-food companies in line with Chapter 2 Part E of
the CPAs Right to fair and responsible marketing beckons the need for vigilant
activism. Key ethical question here is how ethical is promotion of behaviour to a
vulnerable audience which is unable to distinguish right from wrong in consumption of
products promoted to them within a framework of positive traits sporting events. In
addition, how ethical is such a promotion when in fact the consequent traits are negative
in encouraging obscenity (Surujlal etal (2009); increased drug-usage in later years as
well as alcohol-related trauma morbidity and mortality activities (Editorial: 1995).
Whilst there is no denying the fact that sponsoring of sporting events continues to be a
well-needed contribution to the sporting fraternity, sports events need to ethically review
their association with companies who desire to sponsor sports events.
Continued growth by public advocates, government entities and alike around the
controversial associations of companies whose products messaging do not send
authentic messages with well-meaning intentions mandates this.
Lastly, whilst the legislations are in place for the banning of tobacco advertising, it is
imperative that loopholes pertaining to other forms of advertising are closed speedily.
Failure to do so, will mean that the legislations in place have yet to truly deliver on the
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mandate of protecting the vulnerable consumers, herein the youth, from the ethically
questionable activities of tobacco companies.
7. CONCLUSION
Brenkerts (1998) definition of a vulnerable consumer as a consumer who is likely to be
harmed because what they want, unfairly harms them was duly unpacked in this paper.
The taking advantage of marketers to date in selfishly pursuing profit-centric strategies
to these consumers was also highlighted. This was profiled through the case study
offering of sports sponsorships of product categories of alcohol, tobacco as well as
unhealthy food. It is invariable through promoted marketing messages during sports
events that the taking advantage of an audience that is unable to distinguish right from
wrong consumption has occurred.
It is in fact, in the presence of Consumer Protection Laws, that the said vulnerable
consumer has been able to now be allowed to operate within a fair marketplace.
However, into the future it is in the interests of these consumers that legislative laws will
only become real when court challenges are lodged through intensified and vigilant
activism.
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