Making Informed Consumer Decisions (LC 2027) (Leaving Cert Business): Revision Notes
Making Informed Consumer Decisions
Making informed consumer decisions involves understanding how our purchasing choices impact society, the environment, and the economy. As consumers, we need to consider the ethical, environmental, and economic consequences of our buying decisions to become more responsible participants in the marketplace.
Every purchase we make sends a message about the values we support and the world we want to create. By making conscious choices, we can drive positive change in business practices and contribute to a more sustainable future.
Ethics, sustainability and consumer behaviour
Consumer choices and behaviour significantly impact the three pillars of sustainability: social, environmental, and economic. When making purchasing decisions, we should examine how our choices affect people and communities, the natural world, and economic systems.
Before making any purchase, ethical consumers ask themselves critical questions that help evaluate the true impact of their buying decisions.
The key questions ethical consumers ask before making purchases include:
- Where was the product made and how far did it travel?
- Who made it and were they treated fairly?
- What materials were used and how were they sourced sustainably?
- How will I dispose of the product and its packaging?
Types of conscious consumers
Ethical consumer
An ethical consumer purchases products that are produced in an honest and fair way that respects all stakeholders, including the natural environment. These consumers carefully consider their moral values when making purchasing decisions.
Ethical Consumer Decision-Making Process
When buying a t-shirt, an ethical consumer would investigate:
- Factory conditions and worker wages
- Transportation methods and carbon footprint
- Material sourcing (organic cotton vs. conventional)
- Company's labour practices and certifications
- End-of-life recyclability or biodegradability
Ethical consumers evaluate products based on:
- Production location and transportation distance (carbon footprint)
- Worker treatment and fair wages
- Human rights considerations and child labour laws
- Sustainable sourcing of materials and environmental impact
- End-of-life disposal and recyclability of products and packaging
Green consumer
A green consumer takes environmental concerns seriously and only purchases products that minimise damage to the environment. Many household cleaning brands now offer plant-based alternatives to target these environmentally conscious consumers.
Green consumers prioritise products that:
- Use natural, biodegradable ingredients
- Have minimal environmental impact during production
- Feature recyclable or sustainable packaging
- Support renewable energy initiatives
- Avoid harmful chemicals and toxins
The rise of green consumerism has led to significant innovation in product development, with companies investing heavily in eco-friendly alternatives to meet growing demand.
Corporate social responsibility (CSR)
Corporate Social Responsibility (CSR) is a business model that helps companies become socially accountable to themselves, their values, ethics, and stakeholders. It represents how businesses measure success beyond just profit, considering their impact on people and the planet.
The four pillars of CSR
CSR encompasses four main areas of responsibility that work together to create comprehensive business accountability:
CSR in Practice: Environmental Responsibility
A technology company implementing environmental responsibility might:
- Switch to 100% renewable energy for all facilities
- Implement zero-waste manufacturing processes
- Create take-back programmes for old devices
- Invest in carbon offset projects
- Design products for longevity and repairability
Environmental responsibility includes:
- Reducing pollution and greenhouse gas emissions
- Implementing waste reduction and recycling programmes
- Using renewable energy sources
- Funding climate action research
Philanthropic responsibility involves:
- Making charitable donations to worthy causes
- Supporting community development projects
- Volunteering for local organisations
- Aligning charitable activities with company values
Ethical responsibility covers:
- Treating all stakeholders fairly and honestly
- Paying employees fair wages and benefits
- Sourcing materials ethically and sustainably
- Avoiding child labour and exploitative practices
Economic responsibility focuses on:
- Supporting communities through financial commitments
- Creating jobs and economic opportunities
- Contributing to local economic development
- Maintaining financial transparency
Fairtrade movement
Fairtrade is an international movement that aims to improve trade practices by ensuring better prices, decent working conditions, and fairer deals for farmers, producers, and workers in developing countries. When consumers buy Fairtrade products, they support businesses that meet internationally agreed standards.
Fairtrade certification ensures that producers receive fair compensation for their work while promoting sustainable farming practices and community development.
The Fairtrade system provides:
- Fair prices for producers that cover production costs
- Better working conditions and labour standards
- Community development through premium payments
- Environmental protection through sustainable farming practices
The circular economy
The circular economy is a business model focused on production and consumption that extends the lifecycle of products, reduces waste, and creates additional value. Unlike the traditional linear "take-make-dispose" model, the circular economy keeps resources in use for as long as possible.
Circular economy process
Circular Economy in Action: Smartphone Lifecycle
- Design - Create modular phones with replaceable components
- Production - Use recycled materials and renewable energy
- Distribution - Efficient packaging and local supply chains
- Consumption - Regular software updates extend device life
- Collection - Take-back programmes for old devices
- Recycling - Extract materials for new phone production
The circular economy follows a continuous cycle:
- Design - Products designed for durability and reusability
- Production and re-transformation - Manufacturing with recyclable materials
- Transportation and distribution - Efficient logistics and supply chains
- Consumption - Use, reuse, and repair of products
- Collection - Gathering products at end of useful life
- Recycling - Processing materials for new products
How consumers can contribute
Consumers can support the circular economy by making thoughtful decisions at every stage of product ownership:
Before buying:
- Researching whether you actually need the item
- Considering buying a second-hand or refurbished product
- Checking durability and repairability
During use:
- Maintaining products properly and regularly
- Installing upgrades when possible
- Repairing items when they break
- Donating items you no longer need
At end of use:
- Considering if someone else could use the item
- Exploring repair or refurbishment options
- Disposing of products responsibly through recycling
- Selling or donating usable items
The shadow economy
The shadow economy (also called the hidden economy) refers to all economic activity that goes unrecorded in national income accounts. This includes businesses and individuals who avoid their legal responsibilities by not declaring income or paying appropriate taxes.
Negative impacts of the shadow economy
The shadow economy creates unfair competition and undermines legitimate businesses, workers, and government services that depend on tax revenue.
Impact on consumers:
- Health and safety risks - Products may not meet safety standards
- Lack of employee protection - Workers lack minimum wage protection and safety standards
Impact on businesses:
- Reduced sales and profits - Legitimate businesses lose customers to cheaper shadow economy alternatives
- Unemployment - Legitimate businesses may struggle to compete and reduce staff
Impact on the economy:
- Lost government revenue - Unpaid taxes reduce funding for public services
- Enforcement costs - Government resources diverted from essential services to inspections and enforcement
Digital technology and consumer behaviour
Digital technology has transformed how consumers shop and make purchasing decisions. Online shopping and digital platforms provide new opportunities and challenges for consumers seeking to make informed choices.
Positive impacts of digital technology
Digital transformation has revolutionised the shopping experience, offering unprecedented convenience and access to information:
Convenience:
- Easy access to websites, social media, and mobile apps
- 24/7 shopping availability
- Quick access to goods and services
- Digital formats for services (e.g., online personal training)
Choice:
- Access to products and services from around the world
- Wider selection than available in local stores
- Ability to compare products easily across multiple retailers
Product information:
- Detailed product information on business websites
- Customer reviews and ratings
- Price comparison tools
- Research capabilities before purchasing
Negative impacts of digital technology
While digital technology offers many benefits, consumers must remain vigilant about potential risks and challenges in the online marketplace.
Lack of human interaction:
- Reduced personal customer service
- Decreased customer loyalty
- Negative impact on local town centres and high street businesses
- Potential business closures
Difficulty returning items:
- Complicated return processes, especially for international purchases
- Additional charges for returns from outside the EU
- Inability to physically examine products before purchase
Fraud:
- Increased susceptibility to online scams
- Identity theft and financial fraud
- Need for enhanced cyber security awareness
- Risk of purchasing from fraudulent websites
Data protection and GDPR
The General Data Protection Regulation (GDPR) establishes rules about protecting people's personal data and governs how organisations process personal information of EU citizens.
Key GDPR concepts
Understanding GDPR requires familiarity with key roles and responsibilities in data processing:
Data subject: An individual whose personal data is held or used by an organisation
Data controller: The organisation or company that determines the purposes and methods of processing personal data
Data processor: An organisation that processes personal data on behalf of the data controller
Data subjects' rights under GDPR
Individual Rights Under GDPR
GDPR empowers individuals with significant control over their personal data, ensuring transparency and accountability in how organisations handle personal information.
Individuals have several important rights regarding their personal data:
- Access - Right to receive a copy of personal data held about them within 40 days
- Correction - Right to have errors or inaccuracies in personal information corrected
- Complain - Right to complain to the Data Protection Commission about data breaches
- Compensation - Right to seek compensation for losses resulting from data breaches
- Removal - Right to have personal data removed from direct marketing lists
Data controllers' obligations
Organisations processing personal data must comply with strict obligations to protect individual privacy and maintain data security.
Organisations processing personal data must:
- Keep data secure and protect it from unauthorised access
- Maintain accuracy by updating information periodically
- Use data appropriately only for specified, legitimate purposes
- Obtain information honestly and transparently
- Ensure data adequacy - collect only necessary information
- Retain data appropriately - not longer than necessary
- Provide access to individuals upon request
Data Protection Commission (DPC)
The Data Protection Commission is Ireland's independent authority responsible for upholding individuals' rights regarding personal data protection. The DPC's functions include:
- Maintaining registers of data controllers and processors
- Developing and publishing codes of practice
- Providing information to the public
- Investigating complaints and legal proceedings
- Issuing enforcement notices for regulation breaches
Key Points to Remember:
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Ethical consumers consider the social and environmental impact of their purchases, focusing on fair trade, worker treatment, and sustainable production methods.
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Corporate Social Responsibility involves four key areas: environmental, philanthropic, ethical, and economic responsibilities that help businesses become more accountable to society.
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The circular economy extends product lifecycles through design, production, consumption, collection, and recycling, creating a sustainable alternative to linear consumption models.
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Digital technology offers convenience and choice for consumers but also presents challenges including fraud risks, reduced human interaction, and difficulties with returns.
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GDPR protects personal data by giving individuals rights over their information and requiring organisations to handle data responsibly and transparently.