Page 317 - Encyclopedia of Business and Finance

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Fair Packaging and Labeling Act of 1966

bage Patch Kids had lost a dominating position in the BIBLIOGRAPHY
market by 1985. Kotler, Philip, and Armstrong, Gary (2005). Principles of Mar-
keting (11th ed.). Upper Saddle River, NJ: Prentice Hall.
The Cabbage Patch Kids had a standard product
development stage, but its introduction stage was short. Friedrich, Otto (1983, December 12). “The Strange Cabbage
Patch Craze”. Time, 122.
Shortly after hitting the toy store shelves, sales skyrocketed
and the product entered the growth stage with full force.
It entered the maturity stage when sales starting leveling Jennifer L. Scheffer
off and the supply was greater than the demand. In an
effort to prevent the product from entering the decline
stage, marketers at Coleco experimented with product
extensions—but to no avail. Eventually, profits began to FAIR PACKAGING AND
drop and the Cabbage Patch Kids fell into the decline LABELING ACT OF 1966
stage. Figure 1 shows the product life cycle of fads.
Many consumer problems have been, and in some
Fads are generally mysterious both to their creators
and to the public. Although their products were unique, instances still are, caused by incorrect and even fraudulent
information disclosure on products and through advertis-
Wham-O, Dahl, and Roberts had no idea they would
ing. The Fair Packaging and Labeling Act of 1966 was
experience such rapid success. Past fads have included the
passed during the Johnson administration to ensure that
Rubik’s Cube, Beanie Babies, and Furbee. Most fads never consumers have the information they need to choose
really completely die, but they never regain their initial wisely among competing products. The act directs busi-
popularity. To understand consumer obsessions with fads,
nesses to disclose necessary information truthfully. Prod-
marketers must understand consumer buying behavior.
uct labels must include such basic information as
ingredients and contents, quantity, and maker of the
CONSUMER BUYING BEHAVIOR product. Therefore, any business engaged in producing
There are four types of buying behavior: complex buying and distributing consumer products must comply with
behavior, dissonance-reducing buying behavior, habitual the Fair Packaging and Labeling Act of 1966. This act
buying behavior, and variety-seeking buying behavior. comes under the consumer-protection charge of the Fed-
Complex buying behavior occurs when the consumer is eral Trade Commission, which bears the primary respon-
purchasing something expensive or risky, such as a per- sibility for making sure that labeling is not false and
sonal computer. The consumer must learn about the misleading. Textiles and food products are two examples
product line, is highly involved in the buying process, and of products regulated under this act, which not only pre-
perceives significant differences among brands. Marketers vents consumer deception but also provides consumers
must differentiate their products’ features from other with the opportunity to compare value.
brands. Dissonance-reducing buying behavior occurs
Amendments to the Fair Packaging and Labeling Act
when an expensive or risky purchase is being made, but of 1966, passed in 1992 and enforced beginning in 1994,
the consumer perceives no difference in brands. They may require labels to include conversion of quantities into a
purchase the brand that offers the best price or that is the
metric measurement in addition to the customary U.S.
most convenient to buy. Habitual buying behavior
system of weights and measures. There was a great deal of
involves low consumer involvement and little concern for opposition to this act from both private and public-sector
brand differences. Variety-seeking buying behavior is
manufacturers that sold their products only in the United
characterized by low consumer involvement but signifi-
States. For example, some paint manufacturers said that
cant differences in brands. Consumers displaying this type labeling contents in pints and gallons should be sufficient
of buying behavior often switch brands to experience vari- since their paint was sold only in the United States. The
ety rather than because of dissatisfaction.
minimum federal penalty for not including metric meas-
Fad purchasers display variety-seeking buying behav- urements was established at $10,000. State regulators
ior. Buyers of Beanie Babies are loyal to the Ty brand; they have the authority to remove products from store shelves
will not buy competing brands. Many consumers who if they were not compliant with the established guidelines.
buy Beanie Babies switch to the next craze when it hits the
Under the George H.W. Bush administration, the
shelves. PokeMon became the latest fad in 2000, and the Nutrition Labeling and Education Act of 1990 was
variety seekers shifted again to this latest trend. Until con-
passed, which requires detailed information on labels and
sumer demands and obsessions cease to exist, fads are here standardized descriptive phrases such as “low fat” and
to stay.
“light.” Manufacturers had to comply with this act by
SEE ALSO Marketing; Promotion 1994. Since the passage of the Nutrition Labeling and

294 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION