MKT 554 Week 6 Consumer Protection and Buyer Behavior Strategy Example

Fair Terms for Families: Consumer Protection, Rent-to-Own Disclosure and a Buyer Behavior Strategy for a Texas Instrument Retailer

[Student Name]

University of Phoenix

MKT/554: Consumer Behavior

Week 6 Final Assignment

[Instructor Name]

[Date]

Harmon and Vale Music, its contracts and its plans are composites written for a model paper.

Five earlier papers studied the customers of Harmon and Vale, an invented Texas retailer of band instruments, pianos and guitars: how families build preferences in the store, how band directors, families and culture shape purchases, what motivates adult piano buyers, why families' attitudes toward band weaken in winter and how truthful messages can persuade. The chain's main financial products are rent-to-own plans for school instruments and, since last year, a buy-now-pay-later option offered through a lending partner for piano and guitar purchases over $500. Both make music affordable, and both create obligations. A review of complaints found 64 last year, most about unexpected late fees, unclear ownership credit and pay-later charges. This paper examines consumer protection issues in the chain's practices and presents an integrated buyer behavior strategy.

Vulnerability and Harm

Smith and Cooper-Martin (1997) studied public reactions to target marketing and found that criticism depended on two factors: how harmful the product was and how vulnerable the targeted consumers were, such as children or people with limited knowledge or resources. Marketing of a harmless product to capable adults raised few concerns, while marketing of risky products to vulnerable groups raised many. Musical instruments are beneficial, but the credit attached to them is a financial product, and some customers, especially families under financial strain or with limited English, are more vulnerable to confusing terms.

Financial Literacy

Lusardi and Mitchell (2014) reviewed research showing that financial literacy is low in many countries, including the United States, and that many people cannot answer basic questions about interest, inflation and risk. Lower literacy was associated with worse borrowing decisions and higher costs. A parent who signs a rent-to-own contract on a busy school night may not calculate the total of 30 payments or understand how credit transfers.

Pay-Later Credit

A federal report (Consumer Financial Protection Bureau, 2022) found that pay-later lending in the United States grew rapidly from 2019 to 2021 and described risks to consumers, including inconsistent disclosures and dispute protections, the ease of taking out several loans with different lenders at once and lenders' collection and use of consumer data. Although the bureau's findings concern lenders, retailers that offer pay-later plans at checkout shape how customers encounter them.

Auditing Harmon and Vale's Practices

The audit found five issues. First, rent-to-own contracts state the monthly payment prominently but show the total cost to own and the cash price only in fine print. Second, ownership credit earned to date appears nowhere on monthly statements. Third, a $15 late fee applies after five days, and 40 percent of late fees fall on families who later return the instrument, suggesting financial strain. Fourth, Spanish contract summaries are two versions behind the English ones. Fifth, the pay-later option is presented by salespeople as "no interest" without explaining that missed payments can bring fees and that the plan is a loan. The chain shares customer data only with its lending partner, but its privacy notice does not say so clearly.

None of these practices is designed to deceive, but each lets confusion work in the company's favor.

Consumer Protection Commitments

The chain should adopt five commitments, with legal review of each. Every rental contract will begin with a single bilingual summary page showing the monthly payment, number of payments, total cost to own, cash price and how ownership credit works, written at an eighth-grade reading level. Monthly statements will show credit earned. Late fees will begin after 15 days, and families can request one payment pause per year. Salespeople will describe pay-later plans as loans, explain fees for missed payments and offer the cash price first. The privacy notice will state plainly which partners receive customer data and why.

Integrating the Course

The protections fit within a wider strategy built on the course's findings. From Week 1, three clearly explained options per instrument, with the director-recommended model in the middle, help families make sound choices without decoys. From Week 2, service to band directors, family heritage programs, mariachi instruments in San Antonio and bilingual staff recognize the real influences on purchases. From Week 3, adult buyers receive guidance and inspiration through listening rooms, return-to-music lessons and technician visits. From Week 4, the first winter receives play-along nights, practice guides and payment pauses to support attitudes toward continuing. From Week 5, persuasion relies on truthful local norms and verified cost comparisons. Consumer protection runs through each, since clear terms support preference, trust, attitudes and persuasion alike.

Who Is Most Vulnerable

The audit's data identify three groups who need particular care. Families in lower-income school districts pay late fees most often and return instruments most often, so terms that punish late payment fall hardest on them. Spanish-speaking families receive outdated contract summaries and often rely on a child to translate at the counter, which is unfair to both parent and child. Older adults buying pianos on pay-later plans, some on fixed incomes, may not realize that the plan is a loan from a separate company. None of these groups is targeted on purpose, but each meets the chain's credit products under conditions that make misunderstanding likely.

Training the Sales Floor

Policies change little unless the people at the counter apply them. All sales and school-night staff will complete a two-hour course on the new summary page, the pay-later explanation and how to recognize a customer who seems unsure. Staff will be measured on comprehension checks completed, not on the share of customers who choose credit, which removes the incentive to push loans. Managers will review a sample of contracts each month.

Business Case

The protections carry costs, chiefly lower late-fee revenue of about $85,000 a year and staff training time. The strategy expects gains that exceed those costs: fewer early returns as payment pauses and visible credit keep families renting, fewer complaints and stronger referrals from band directors, who hear about every billing dispute. If first-year returns fall from 38 to 30 percent, the chain would keep roughly 900 more rentals each year.

Risks of the Strategy

Two risks deserve attention. Clearer disclosure may lead some families to choose cheaper used instruments elsewhere, reducing rentals in the short run; the chain accepts this, since those families were likely to return instruments early. The lending partner may resist changes to how the pay-later plan is described, so the chain should be prepared to change partners if necessary.

Measures

Progress will be judged by the first-year return rate, complaints per 1,000 contracts, a short comprehension check in which new customers answer three questions about their contract, adult segment sales and lesson enrollment and band director satisfaction in an annual survey. Results will be reviewed each January.

Conclusion

Understanding buyers gives a company power, and consumer protection is the discipline of using that power fairly. Research on vulnerability, financial literacy and pay-later credit shows where Harmon and Vale's practices could harm families. Plain disclosure, fair fees and honest selling, combined with the course's findings on preference, influence, motivation, attitudes and persuasion, form a strategy that serves customers and sustains the business.

References

Consumer Financial Protection Bureau. (2022). Buy now, pay later: Market trends and consumer impacts. https://www.consumerfinance.gov/data-research/research-reports/buy-now-pay-later-market-trends-and-consumer-impacts/

Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5-44. https://doi.org/10.1257/jel.52.1.5

Smith, N. C., & Cooper-Martin, E. (1997). Ethics and target marketing: The role of product harm and consumer vulnerability. Journal of Marketing, 61(3), 1-20. https://doi.org/10.1177/002224299706100301