Monday, July 28, 2008

Consumers Act

Consumerism (Hark, Madame President)

Parents helping their children with homework undergo a second learning process when they realize that the subjects they learned in school have changed due to technological advances and scientific discoveries. One of the subjects that adults have difficulty in making kids comprehend is economics. The problem lies in the emphasis of textbooks and tutors on the bundle of terms that often are not related to the real world.
It is not uncommon for people to interpret the “law of supply and demand” as some regulation the city council passed in one of their productive moments. Many adults consider economics confusingly complex and are repelled by all the economic jargon and statistics. As a result, mistaken notions are developed about how our society works. And these notions are sometimes harmful to their pocketbooks.
In our free-market economy, the consumer is one of its major movers. Businesses depend on the consumer to sustain their life. Consumer purchases amount to almost two thirds of all the money spent yearly, while government and business spend the other third. The problem is the consumers needs are almost endless but their incomes are not. So, most people choose their purchases to fit their income.
The Mammoth Consumer
We have about 65 million consumers ─ the country’s entire population, Even the breast-feeding newborn is an indirect consumer as it partakes of the nutrients bought and ingested by its mother. With such awesome numbers you would think that consumers would be such an intimidating influence in controlling the prices of the goods they buy. We all know differently.
Filipino consumers have a quality of remarkable docility and meekness. They are slow to anger not because of an abundance of patience, but because of timidity. This enormous segment of our society is impotent for lack of unity. Only a very few have banded into pitifully frail organizations.
Yet, Filipinos have a penchant for organization. Politicians have a governors league, vice-governors league; bureaucrats bunched into associations of directors, of auditors, of judges, and there are countless clubs in the private sector: community social groups, industry and trade cartels, the imports such as Rotary and Lions, the professionals (doctors, dentists, CPAs, engineers,) elite golf clubs and numerous labor unions. With such bent, it might not be surprising to find a hairstylist union and gay club.
Unlike the assertive labor unions, consumer blocs are mere fellowship clubs, rarely heard. When they do break silence it is usually a whimper or a whine about soaring prices, and a hope for government or divine intervention. Hope! the last recourse of the desperate; the last curse left in mythical Pandora’s box afflicting only humans. For hope is a disease that thrives in the indolent like our own fabled Juan Tamad lazing under a fruit tree with mouth open, hoping for a fruit to drop in. (Hopefully is now a trite word in “Filipino”) An unbelievably huge number of our population believe in the supernatural philosophy of pray and hope or leave things to the Almighty.
Exaggeration? Read on.
A few years back, housewives in a nationwide survey were asked what they thought were the best ways to improve the country’s pressing problems of unemployment, high cost of living and graft and corruption. Topping the list in their response was prayer, garnishing 81%. Asked further what method they will actively support, 90% of respondents selected prayer!
Yes, consumers did wail to high heavens then. They still do and are still unaware that this defeatist attitude is unhealthy to their purse and well-being. As was learned the hard way in industrialized Europe and America, consumers must fight for their rights. The first step is to unite and band into purposeful and dynamic organization. Such a giant can shoulder our creeping economy into movement using a potent force: purse power, with consumerism as its main component.
The Masterly Consumer
Consumerism is a protest against abuses in the market system and a demand that marketers give greater attention to consumer wants and desires in making their decisions. Some businesses view consumerism as posing more harm than good to society. But consumerism and the market system need not be adversarial. Undeniably, consumerism will require changes in some aspects of business life, forcing some businesses to be more responsible to their consumers. However, the more responsive view consumerism as an opportunity rather than a threat and are prepared to accept the challenge of consumer contentions, such as:
            æ Marketing system is inefficient and the cost high
            æ Marketers practice collusion and price fixing

            æ Marketing system produces hazards to health and safety
            æ Product quality and service are poor
            æ Consumers do not get information
Government has a long history of giving protection to businesses in the form of tariffs and quantitative restrictions on imports to protect infant industries, price supports to farm produce, and indirect subsidies such as tax exemptions. Almost all of these protectionist actswere at the expense of consumers who had to pay higher prices for the protected products. Only in the recent past has the consumer been recognized as an important cog in our economic machinery, with the passage of two Congressional Acts: the Price Act of 1992 and the Consumers Act of 1992 (Republic Act No. 7394).
The Price Law provided for price controls but was limited to times of emergency. The Consumer Act gave consumers wider recognition by acknowledging eight Consumer Rights:
            Right to Basic Goods, Services, and Fair Prices
            Right of Choice
            Right to Consumer Education
            Right to Redress
            Right to Representation
            Right to Safety
            Right to Information
            Right to a Healthy Environment
Even with this legislated armory, the consumer should keep in mind the admonition: They have rights who dare defend them! You can bet that these rights will be tested by some cunning merchants. Consumers who fail the tests pay the price. Literally.
Cagayan de Oro has high hopes (this word again) of attaining megacity status, a goal boosted by Pres. Ramos’ endorsement of the Cagayan-Iligan Industrial Corridor. The local economy will certainly be stimulated by the industrialization process, but will also dig pitfalls for the unwary consumer. When money, technocrats and entrepreneurs start flowing in, the market system will be put under severe stress with the inflation specter hovering nearby.
Agony before Ecstasy
Before tackling the problems in a booming CIC, Cagayan de Oro consumers must first face the current obstacles. Foremost is the value added tax (VAT). With the Supreme court ruling that the VAT law is valid, consumers are again faced with the possibility of galloping prices. Although the Department of Trade and Industry and the Department of Agriculture warned traders against unlawful price hikes, past experience tells us that the bureaucrats have been outwitted by avaricious merchants. The only effective force to protect the consumers is concerted action by consumers!
Consumer composure will be shaken next by two events: the ratification by the Senate of the General Agreement of Tariff and Trade (GATT) and the certainty of a fuel hike.  Membership to the World Trade Organization (WTO) will be the result of the ratification of GATT by the Senate. GATT requires member nations to open their markets and remove trade barriers. Government says ratification is imperative for the nation’s survival in the global trade competition. Economists agree and warn of doomsday for our economy if the Senate fails to ratify GATT. However, the protected industries oppose it, waving the flag of patriotism and predicting massive loss of jobs from industries killed by foreign competition.
Where does this leave the consumer in the controversy? Exposed again to the mercy of opportunists taking advantage of the situation by creating artificial shortages to induce prices to rise.
The other instrument that will punch a hole in consumer pockets is the likelihood of a fuel price increase. The Oil Price Stabilization Fund (OPSF) will be exhausted in 5-8 months depending on crude prices and the foreign exchange rate of the peso. If crude prices are steady at $17 per barrel and the peso-dollar exchange holds at 26:$1 then the OPSF will last until March 1995. If crude prices rise to $18 per barrel and the peso weakens to 27 per dollar, then the OPSF will be depleted by January 1995. Upon OPSF depletion in early 1995 the Energy Regulatory Board will have to order the increase in petroleum product prices to avoid a fuel shortage crisis. And soon thereafter, commodity prices start soaring.
End of bad news for consumers? Maybe not, if exporters succeed in strong arming the monetary authorities to devalue the peso to their demand of 32 per dollar. And the agony of consumers is just starting! The May 1995 elections will release a flood of money from political spigots, and rising prices will agitate organized labor to demand, and probably get, a legislated wage increase. The money deluge will trigger inflation, so the price spiral rages on.
And all this while VAT is lurking, ready to pounce and complete the dismay of the consumer.
People dislike hearing bad tidings and Cassandra prophesies, consumers included. But they can benefit from a management forecasting technique. The “what if” concept makes plans and lists actions for contingencies.
The Consummate Consumer
Advertising is a powerful marketing tool for luring consumers to buy a product or service. Consumers love the flattery, widening of choices, and slashed prices in sales promotions. The most effective advertising media are newspapers, radio and television, the links between sellers and buyers. But the flow is one way only ─ from seller to buyer. Lately, innovative broadcast media initiated a method of interactive dialogue to obtain audience response.Marketers know that larger audience response means greater customer interest and consequently intensify media advertising, so all players benefit.
Consumers can adopt this business tool as a means of expressing to the market their wants and desires. Listed below are messages which can be expanded by contributing members of a consumer group:
* Caveat Emptor (buyer beware) ─ advisory to members about abuses in the marketplace to include shops with illegal “no exchange/no return” policy, cheater shops, defective products, hazards to health and safety, missing price tags, mislabeling, short-changing or rude sales clerks, under weighing scales, deceptive ads.
* Best-Buy advisory ─ bargain sales, promo sales, unit pricing
* Product Fair ─ urging producers to conduct product demos at retail level
* Commodity Prices advisory at Wet Markets
* Joint Consumer-Govt. Price Watch
*  Media Support ─ Consumer affairs program expands audience base for participating media to entice ads
* Corruption Watch ─ Bribes and tong paid by traders to corrupt officials adds to the cost of doing business and raises the selling price of goods
The big question is: Can Kagayanons rise to the occasion or just remain timorous???

Consumerism ─ It’s Not Just a Fad            
            Max A. Denney, Industrial Banker
As President Nixon said to Congress last December, “Consumerism is here to stay.” A.W. Clausen, vice chairman of the Bank of America, recently proposed a four-point program which we would all do well to heed:
!) Businessmen must listen attentively to what the consumer is saying;
2) We must seek solutions to consumer unrest before government restrictions are imposed;
3) We must deal with these consumer problems head on;
4) We must make sure that Congress and consumer spokesmen are aware that business is truly concerned and is to improve its relationship with the consumer.
Mr. Clausen suggests that for too long businesses have buried their heads in the sand, condoning the misdeeds of a few, and, as a result, have made all business vulnerable to the onslaught of anti-business sentiment.
æ                     æ                     æ                     æ                     æ                     æ
A successful business investment consultant, wise in the behavior of markets advised his clients: Stop buying products that more and more people are buying. The excessive demand will drive the price up.
Losses of franchised utilities such as water and electricity
                        A Customer Speaks
                        By O. Delmendo Garcia
Caveat venditor ─ Let the seller beware
The customer is always right. The key word is always, unfailing, everytime. Often or usually is not good enough. This surely is a heavy imposition on the salesperson who is as sentient a being as the customer.
But the store manager believes in the adage like an Eleventh Commandment, and woe to the employee that breaks the dictum. It worked for years, so this imperious decree has persisted to this era of democratic freedoms.
Most retail outlets get trained or instructed to keep their composure even when provoked, taunted, or placed in an unpleasant situation. Yet, occasionally, latent bad breeding triumphs over training, and insolence manages to slip out. This spells trouble all around, mostly for the seller.
The policy of pampering customers stems from the marketing concept of repeat business. The goodwill nurtured by the store is a magnet that persuades the customer to return, sometimes with  friends.
Surveys indicate that 96 percent of dissatisfied customers never complain about discourteous service, but 9 out of 10 of these customers never buy again from the company that offended them. Moreover, most dissatisfied customers will relate their experience to several other people. 
Published Mindanao Post  14 Sep 1994


Jaywalker said...

The meekness and timidity of consumers in the Philippines I believe is brought about by a feudal mindset and entrepreneurs with predatory mentality. Bad combination I suppose exacerbated by endemic corruption in almost ever facet of life thus the absence of a strong consumer group to protect the consumers.

orly_habari said...

JW, How truly sad that even today Filipino consumers are still meek (but don’t deserve inheriting the Earth). My observations 14 years ago (the article is a rehash, written in 1994) have not changed much.

Jaywalker said...

Alarming indeed, I just received an email from one of those salesman selling real estate in the Philippines giving notice on their price increase while their market (overseas Filipinos)are experiencing what maybe the worse mortgage meltdown in the housing market. That I believe is an indication that there is no such thing as a market driven economy in the Philippines and the consumers are always at the mercy of the business sectors irregardless of the market condition.

orly_habari said...

The agony lingers. The Consumer Act blog is a redux written in 1994, revived as a spoof and smirk at Ate Glue’s proposal to legislate an existing law. Apologies for any offense caused by the rehash.