10 Consumerism

Kulbhushan Chandel

1. Learning Objectives

After completing this module, the students will be able to:

Describe the concept of consumerism.
Explain the consumer movement in India.
Explain the main problems faced by the Indian consumers.
What are the major steps taken by the government for consumer protection?
Explain the main provisions of Consumer Protection Act 1986.

2. Introduction

It is well known that with the introduction of industrial era, the society passed from the custom to contract and in nineteenth century the advanced world adopted the individualism as its social philosophy which required instating free competition in business activity and sanctity of contract was the main word for the maker of law. Caveat emptor concept was born due to freedom of contract, sanctity of contractual relations and free competition in the market. But now in modern society, the main limitations faced by the competition in the retail market for consumer goods are the advertising is made with an aim to inform consumers and also to limit competition; ignorance of the buyer in the rapid technological advancement; restrictive practices covering wholesalers and manufacturers. The stride of the technology has increased the difficulties of the consumers along with the opportunities. The consumer himself does not know whether the prescribed drug meets the minimum standard and whether the food he consumes has the nutritious value or not. For the protection of consumers, the government has taken several initiatives. The rights available to the consumers are right to safety, right to be informed, right to choose and right to be heard. Consumerism suggests different images for different people like campaigning for consumers’ awareness, consumers to be made aware so that they can decide for themselves. Marketers, industry, government and public are all aware of the impact of the consumerism on the economy of the nation and its well being. Consumerism is the demand which makes the marketers to give more attention to desires of the consumers. It is a protest against the abuses and malpractices in the marketing system and is often seen as a part of the broader movement that seeks increased social responsibility in many sectors of the society.

The consumer protection act 1986 was an important legislation passed by the government of India for ensuring that a proper system is established for the protection of the consumers’ rights and the redressing of consumer disputes. In this act, there was a provision made for the establishment of the consumer councils and other authorities for the settlement of consumer disputes. This act applies to all goods and services and is applicable to whole of India except the state of Jammu and Kashmir. The act provides for the establishment of two councils namely, Central Consumer Protection Council and State Consumer Protection Council. The government of India celebrates 24 December every year as ‘National Consumer Day’ since the enactment of this act on 24 December 1986. Besides this, 15 March is observed as ‘World Consumer Rights Day’ every year.

3. Meaning of Consumerism

As defined by Philip Kotler,

“Consumerism is an organised movement of citizens and government to protect the rights and enhance the power of buyers in relation to the sellers.”

As defined by George A. Steiner & John F. Steiner,

“Consumerism is a movement desired to improve the rights and powers of consumers in relation to the sellers of products and services. It is protest movement of consumers against what they or their advocates see as unfair, discriminatory and arbitrary treatment. Consumerism is as old as business but has taken a new dimensions and thrusts in recent years. Consumerism does not mean that caveat emptor- let the buyer beware – is replaced by caveat vendor- let the seller beware. It does mean, however, that protecting the consumer is politically acceptable and that the government will survey consumer demands for better treatment and respond to them with new guidelines for and regulations over business.”

Consumer protection refers to a number of activities that are designed to protect consumers from a wide range of practices that can infringe upon the rights that consumers are believed to possess in the market place. These activities stem from a broad and aggressive movement usually called consumerism that is supported by consumers themselves, particularly consumer advocates, by many business organisations, and by the government to see that these rights of consumers are respected. Consumerism has been defined as a social movement seeking to augment the rights and powers of buyers in relation to sellers.

4. Consumer Movement in India

The dilemma of consumers in India is similar to that of their counterparts in the U.S. and other countries. The problem of Indian consumers is similar to that of US and other countries. Relatively, the situation of Indian consumers is bad due to lack of illiteracy, information and inability to understand complexities of marketing. Consumers here are exploited by the unethical marketers and even consumers are becoming victims of poor quality products. The market was filled with a huge variety of products which lead to difficulty for the consumers to ascertain the quality of products while buying it. Even the marketers tried to capitalise the situation by resorting to unfair and unethical trade practices, black marketing, unsafe consumer products, hoardings, and so on. Problems faced by the Indian Consumers are as follows:

Scarcity of essential commodities occurs very recurrent in India. Such as black marketing, hoarding, etc.
Many consumers become easy victims due to lack of adequate information and familiarity with some new product features.
Due to unawareness amongst the consumers, illiteracy levels and limited information which encourages marketers to develop indifferent attitudes towards their customers.
Consumerism is in its initial stages and thus not well organised and developed.

In order to avoid the problems of consumers there should be active participation in consumer protection activities by the marketers, government and consumers.

4.1 Development of Consumer Movement in India

Presently, the concept of consumer unity could be seen in the form of small but well designed network of consumers union. The consumers associations are making effort to offer a new shape to the consumers fight against exploitation by the system and the marketers. The future scope of development of consumer unions would gear up the momentum and consumer unions will have yhr voice in the economic progress. The development of consumer unions is described in the following three phases:

Awareness phase: in this phase the consumers union starts mobilising the membership and makes an attempt to raise the issues of consumers’ interest and fight for awarding the fundamental rights of the consumers. In this fight the emphasis is given on establishing consumer as an important factor of economic activity.
Consumer education phase: this phase can also be called as enlightenment stage. In this phase the role of union has become more dominant and the type of activities undertaken are varied and multiple. At present most of the unions are working at this stage. Their task is to create awareness about consumers’ rights and to train them so that they can exercise their rights in the best possible manner. The unions try to uplift the status of the consumers by providing them legitimate protection by forcing the government to enact various laws. On one side it tries to attract, educate and train consumers in urban areas. At the same time it tries to organise rural consumers. Thus, in state of enlightenment the unions try to enlarge their activities in all spheres of life.
Advance phase: the fight for consumer’s rights is an endless movement to seek justice, socio-economic equality and to acquire a say in the process of economic equality and to acquire a say in the process of economic equilibrium. The development of consumer movement cannot stop at attaining a particular status. Achieving a certain right for the betterment of consumers or to provide them with a facility of legal remedy is not the ultimate aim of consumer movement. Consumer association has a long and unending journey of achieving a suitable status for the consumers and an exploitation free and democratic economic system.

Example: if an owner of the garage signed up to the Motor Industry Code of Practice for service and repair, fails to follow it. Then he is in the breach of the consumer protection from unfair trading regulations.

5. Problems of Indian Consumers

The various problems faced by the Indian Consumers requiring more involvement and support from the government and consumer organisations to protect their rights. Some of them are as follows:

Shortage of essential commodities occurs very often in India and these imbalances in demand and supply lead to hording and black marketing, profiteering and corruption.
Majority of the Indian consumers are not aware about the various rights, due to low level of literacy and other limited information. This persuades the marketers and traders to develop differently attitudes towards their consumers.
Many of the public services are provided by the public sector undertakings run by the government, to serve the public interest. And the performance level of these public sector companies is very unsatisfactory and consumers often have to pay for the very poor service rendered by them.
The absence of adequate information and familiarity with some new product features, many consumers become easy victims and buy the sub-standardised products, or inferior or defective products at the rate of the standard product.
The legal procedure of India is time consuming and tiresome process which acts as a barrier to consumers seeking redressed for their grievances through the judicial system.
Consumerism process is still in infancy and hence not well organised and developed to that level at which it is present in the developed countries.
The consumer protection laws are not being effectively implemented and enforced to achieve the objective of protecting the interest of consumers at large.

The above mentioned problems can be overcome by the marketers if the marketers, consumers and the government all actively and collectively participate. The marketers should take the responsibility to produce the high quality products and services. They must refrain from resorting to unhealthy malpractices such as hoarding and black marketing. The government should also come to rescue the consumers and prevent them from being exploited. Also the proper legislative body should be there to protect the consumers. The government should make efforts to increase the awareness among the consumers regarding the consumer protection machineries. Moreover, the consumers should themselves work in the groups to protect their rights.

6. Government’s Support to Consumers

Various statutory legislations to protect consumers are as follows:

The Monopolies and Restrictive Trade Practices (MRTP) Act 1969 which is replaced by the Competition Act 2002.
Industries Development and Regulations Act 1951
Essential Essentials of Commodities Act 1955
Prevention of Food Adulteration Act 1954
Prevention of Black-Marketing and Maintenance of Essential Commodities Act
Sale of Goods Act 1935
Trade Mark and Merchandise Marks Act 1958
Agricultural Products Grading and Marketing Act 1937
Drugs Control Act 1950
Indian Patents and Designs Act
Indian Standard Institute’s certificate Act 1952
Standards Weights and Measures Act 1956
Consumer Protection Act 1986
Imports and Exports Control Act 1947
Packaged Commodities (Regulation) Order, 1975
Price and Stock Display Order
The Drugs Act 1940
Foreign Trade (Development and Regulation) Act 1992

7. Consumer Protection Act 1986

7.1 Central Consumer Protection Council:

The Central Consumer Protection Council is established by the central government comprising of following members:

Chairman- the Minister of Consumer Affairs
Such number of other official and non-official members as may be prescribed.

The council can meet at any time as necessary but it shall meet once in every year.

The main objectives of the council are to protect the rights of consumers such as:

Right to be informed about the quality, quantity and other necessary information so that consumer can be protected from the unfair trade practices.
Right to be protected against the marketing of the goods and services which are harmful for the society
Right to be assured
Right to be heard and assured that the consumer disputes shall be heard at appropriate consumer councils
Right to seek redressal against restrictive trade practices
Right to consumer education

7.2 State Consumer Protection Council

It is established by the State government and it comprises of the following members:

Chairman – the minister in charge of consumer affairs in the state
Such number of other official and non-official members as may be prescribed by the state government.
Such number of other official and non-official members not exceeding ten, as nominated by the central government.

The state council can meet at any time as necessary but it has to meet twice in every year.

The object of the state council is to protect the rights of the consumers within the state.

The state council shall also establish District Consumer Protection Council in every district of the state. The District Consumer Protection Council shall comprise of the Collector as chairman and other members as prescribed by the state government.

7.3 Consumer Disputes Redressal Agencies

The act provides for the establishment of the following consumer disputes redressal agencies:

District Consumers Disputes Redressal Commission: it is also known as District Forum. It is established by the state government in each district of the state.
State Consumers Disputes Redressal Commission: it is also known as State Commission as established by the state government.
National Consumer Disputes Redressal Commission: it is established by the central government which deals with the disputes of the whole country.

The person if he/she is not satisfied with the decision of the District Forum then he/she can apply to the State Commission within 30 days of such decision. And in case if the consumer is not satisfied with the decision of the State Commission then he/she can apply to the National Consumer Disputes Redressal Commission within 30 days of such decision. In case if the consumer is not satisfied with the order of the National Consumer Disputes Redressal Commission then he can apply to the Supreme Court within 30 days of such order.

At present there are 34 State Commissions and 588 District Forum besides National Commission. The state governments are responsible for District Forum and State Commissions. The Central Government established the National Commission in 1988 at New Delhi. The government of India celebrates 24 December every year as ‘National Consumer Day’ since the enactment of this act on 24 December 1986. Besides this, 15 March is observed as ‘World Consumer Rights Day’ every year.

8. Summary

Traditionally, the sellers or marketers were dominating as consumers had very little choice of products and services. This has resulted in dishonest trading activities and cheating the naive customers. As per them the buyer’s responsibility to ensure and confirm about attributes, the concept of caveat emptor- let the buyer beware was there. This attitude of marketers made exploitation of consumers through restricted and unfair trade practices. Consumers were harmed in many ways by the marketers like charging high prices, restricted and unfair trade practices, and poor services. The situation of Indian consumers is bad due to lack of illiteracy, information and inability to understand complexities of marketing. The market was filled with a huge variety of products which lead to difficulty for the consumers to ascertain the quality of products while buying it. Even the marketers tried to capitalise the situation by resorting to unfair and unethical trade practices, black marketing, unsafe consumer products, hoardings, and so on. CRM centre of attention totally is on customers and the organisations’ entire range of functions related to value creation and value delivery. It is connected with developing brand loyalty and customer loyalty to the highest possible level to maintain long term customer relationship. Customer Relationship Management is a management process of obtaining customers by understanding their needs, retaining customers by fulfilling their needs more than their expectations and attracting new customers through customer specific strategic marketing approaches. The process consists of total commitment on the part of entire organisation in evolving and implementing relationship strategies that would be rewarding to all concerned. The modern philosophy of marketing focuses on the relationship marketing approach as an effectual means for achieving marketing goals in a highly competitive environment. The centre of attention is on creation of customers, growing and retaining them has become very important. The consumer protection act 1986 was an important legislation passed by the government of India for ensuring that a proper system is established for the protection of the consumers’ rights and the redressing of consumer disputes. In this act, there was a provision made for the establishment of the consumer councils and other authorities for the settlement of consumer disputes. This act applies to all goods and services and is applicable to whole of India except the state of Jammu and Kashmir. The act provides for the establishment of two councils namely, Central Consumer Protection Council and State Consumer Protection Council. At present there are 34 State Commissions and 588 District Forum besides National Commission. The state governments are responsible for District Forum and State Commissions. The Central Government established the National Commission in 1988 at New Delhi. The government of India celebrates 24 December every year as ‘National Consumer Day’ since the enactment of this act on 24 December 1986. Besides this, 15 March is observed as ‘World Consumer Rights Day’ every year.

Suggested Readings (Books and Websites)

Ghosh PK, Sales Management- Text and Cases, Himalaya Publishing House, 2010.
Jobber David and Lancester Geoff, Selling and Sales Management, Pearson Education, Sixth Edition.
McCarthy, Jerome E. (1964). Basic Marketing. A Managerial Approach. Homewood, IL: Irwin.
Needham, Dave (1996). Business for Higher Awards. Oxford, England: Heinemann.
Kotler, Philip (2012). Marketing Management. Pearson Education. Kotler, P. and Keller, K. (2006), Marketing and Management, Pearson Prentice Hall, Upper Saddle River, NJ, USA
McCarthy, Jerome E. (1975)”Basic Marketing: A Managerial Approach,” fifth edition, Richard D. Irwin