lecture 2 , consumerism (new trends in marketing )

8/3/2019 Lecture 2 , Consumerism (New Trends in Marketing )

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Consumerism


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What is Consumerism ?

Consumerism is an organized movement of citizens and government

to strengthen the rights and power of buyers in relation to sellers.

Consumerism refers to the wide range of activities of governmentbusiness and independent organizations designed to protect rights of

the consumers.

Consumerism is a collective consciousness on the part of consumers,

business, government and civil society to enhance consumer

satisfaction and social welfare which will in turn benefit all of them

and finally make the society a better place to live in.


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The consumer is exposed to many hazardous - physical,environmental and exploitation due to unfair trade practices.

The consumer needs protection against products which are unsafe

for consumption such as drugs and adulterated food products andproducts which may cause injury such as defective electricalappliances.

Consumer needs protection against mal-practices and deceit by

sellers.

Consumer should have adequate rights and right of recourse toredressal measures against defaulting businessmen.

Why Consumerism ?


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To prevent consumer from exploitation, our

government have passed many Acts from time to

time.

Some of them are as follows:-1. Drug and Cosmetics Act, 1940

2. Prevention of Food Adulteration Act, 1954

3. Essential Commodity (supply) Act, 1955

4. Monopolies and Restrictive Trade Practices Act,1969

5. Standard of Weights and Measures Act, 1976

6. Consumer Protection Act, 1986


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Why Is It Needed ?Why Is It Needed ?

DemandDemand--supply imbalance (demand > supply / demand supply / demand perfectLack of workable competition (monopoly > perfect

competition)competition)

Unfamiliarity with innovationsUnfamiliarity with innovations(poverty, lack of social awareness, accepting life as it is(poverty, lack of social awareness, accepting life as it is

and passive outlook)and passive outlook)

Unconsciousness about rightsUnconsciousness about rights

(illiterate uneducated ignorant and ill(illiterate uneducated ignorant and ill--informed)informed)

Feign advertisements (a need for consumer guidance)

Time consuming legal processTime consuming legal process


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How Has It Come About ?How Has It Come About ?

Before Liberalization :Before Liberalization :--

No Disposable IncomeNo Disposable Income

No Rights & Redressal ForumsNo Rights & Redressal Forums

After Liberalization :After Liberalization :--

Informed ConsumerInformed Consumer

Proactive Steps By Industry & GovernmentProactive Steps By Industry & Government


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What It Creates ?What It Creates ?

Demand driven economyDemand driven economy

Status of king for the ConsumerStatus of king for the Consumer

A more responsive governmentA more responsive government

Minimize imperfections on distribution frontMinimize imperfections on distribution front


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Marketing Aspects of Consumerism

Most consumer problems develop because :

The marketplace is still young and dynamic.

Complaints arise not from poor products, but from how the

products are sold.


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To keep consumer problems to a minimum , three key itemshave to be handled well

1) Product Evaluations

No supplier or manufacturer consciously attempts tomarket a product that doesnt perform well.

But that doesnt mean that the products you sell are the best

for the market you want to reach and penetrate.

Hence evaluate products that are offered to you, in terms

of consumer reaction and perceived usage.


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2) Instructions

Unfortunately, the weakest part on the market today is

documentation.

A company will spend millions of dollars to develop the

product and only a few hundred telling the consumer how to

use it.

Even if your suppliers provide the worst documentation in the

world, they wont be the first one condemned if the products

cant be used as intended you will.XYZ Company may have produced the product, but as far as

the customer is concerned, it was your product that they

bought


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3)C

omplaintsCustomer problems are going to crop up, especially with

something as complex as computer systems and someone

who is a brand new user.

Assign one of your best people to the task of handling

complaints, and give him the power and latitude to solve

them quickly.

Many consumer complaints are not based on grievances

regarding the products or services.

Instead, they develop from gross ignorance or misinformation

on the part of the user.


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HOW CONSUMERISM AFFECTSSOCIETY,

ECONOMY ANDENVIRONMENT?

Consumerism replaces the normal common-sense desire for

an adequate supply of lifes necessities, community life, a

stable family and healthy relationships with an artificial

ongoing and insatiable quest for things and the money to buy

them with little regard for the true utility of what is bought

An intended consequence of this, promoted by those who

profit from consumerism, is to accelerate the discarding of the

old, either because oflack of durability or a change infashion.


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HOW CONSUMERISM AFFECTSSOCIETY, ECONOMY

ANDENVIRONMENT?

It is an often stated that the economy would improve if

people just bought more things, bought more cars and spent

more money.

Financial resources better spent on Social Capitalsuch as

education, nutrition, housing etc. are spent on products of

dubious value and little social return.

In addition, the purchaser is robbed by the high price of new

things, the cost of the credit to buy them, and the less

obvious expenses such as, in the case of automobiles,

increased registration, insurance, repair and maintenance

costs.


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HOW CONSUMERISM AFFECTSSOCIETY, ECONOMY

ANDENVIRONMENT?

Many consumers run out of room in their homes to store the

things that they buy.

A rapidly growing industry in America is that of self-storage.

Thousands of acres of land good farm land are paved over

every year to build these cities of orphaned and unwanted

things so as to give people more room to house the newthings that they are persuaded to buy.

If these stored products were so essential in the first place,

why do they need to be warehoused?


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ADVERTISINGADVERTISING

&&CONSUMERISMCONSUMERISM


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Benefits OfAdvertisingBenefits OfAdvertising

InformInform

GuideGuide

Contribute to efficiencyContribute to efficiency

Stimulate economic progressStimulate economic progress

Expand business & tradeExpand business & trade


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Advertising CodeAdvertising Code

Make honest claims & do not mislead the consumer.Make honest claims & do not mislead the consumer.

Do not offend the generally accepted standards of publicDo not offend the generally accepted standards of public

decency.decency.

Safeguard against the excessive promotion of products whichSafeguard against the excessive promotion of products which

are regarded as hazardous to society or individuals.are regarded as hazardous to society or individuals.

Observe fairness in competition between different brands ofObserve fairness in competition between different brands of

the same product.the same product.


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Consumer Groups

Advocacy groups that seek to protect people from corporateAdvocacy groups that seek to protect people from corporate

abuse.abuse.

Example:Example:-- unsafe products, predatory lending, falseunsafe products, predatory lending, falseadvertising.advertising.

They operate via protests, campaigning or lobbying.They operate via protests, campaigning or lobbying.

BodiesBodies-- Consumer Forum, CAG, VOICE, AIBDA, CICOConsumer Forum, CAG, VOICE, AIBDA, CICO


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LabellingLabelling

As perAs perUpdated Package Commodity Rule (Jan 1, 2007)Updated Package Commodity Rule (Jan 1, 2007)

Name & address of the manufacturerName & address of the manufacturer

Common & generic names of commodity in packageCommon & generic names of commodity in package Name & no. of quantity of each productName & no. of quantity of each product

Net qty. in terms of std. unit of weight of measureNet qty. in terms of std. unit of weight of measure

Month & year of manufacturing / packingMonth & year of manufacturing / packing

Size / dimensions of commodity (where relevant)Size / dimensions of commodity (where relevant)

MRPMRP


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Methods of Consumer Protection

There are four main methods of protecting the interests ofconsumers: -

1. Business Self-regulation:

Businessmen can regulate their own behavior and actions by

adopting higher ethical standards.

Trade associations and chambers of commerce can check unfair

trade practices used by some businessmen.

2. Consumer Self-help:

Every consumer must be alert as self-help is the best help.

He should educate himself and know his rights and should not

allow unscrupulous businessmen to cheat him.


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3. Consumers' Associations:

Consumers should form voluntary associations. These associations can educate and awaken consumers.

They can take organized action and put pressure on businessmento adopt fair trade practices.

4. Government Regulations:

The State can ensure consumer protection through legislative,executive and judicial actions.

The laws enacted by the Government must be strictly enforced

by the executive. Government ofIndia has enacted several laws to protect the

interests and rights of consumers.


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CONSUMERPROTECTIONCONSUMERPROTECTION

ACT,1986ACT,1986


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INTRODUCTIONINTRODUCTION

This ACT is a milestone in the history of socioThis ACT is a milestone in the history of socio--economiceconomic

legislation in the country.legislation in the country.

The first ever legislation in India of its kind which solelyThe first ever legislation in India of its kind which solely

aimed at the grief striken consumers who were the victims ofaimed at the grief striken consumers who were the victims of

the unfair trade practices and sub standard services rendered tothe unfair trade practices and sub standard services rendered to

them.them.


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OBJECTIVESOBJECTIVES

The main objective of the act is to provide for the betterThe main objective of the act is to provide for the better

protection of consumers.protection of consumers.

The act is intended toThe act is intended to provide simple, speedy andprovide simple, speedy andinexpensive redressal to the consumers' grievancesinexpensive redressal to the consumers' grievances, and, and

relief of a specific nature andrelief of a specific nature and award ofcompensationaward ofcompensation

wherever appropriate to the consumer.wherever appropriate to the consumer.


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EXTENTAND COVERGAE OFTHEEXTENTAND COVERGAE OFTHE

ACTACT

TheThe salient features of theActsalient features of theAct are summed up as under :are summed up as under :--

The Act applies to all goods and services unless specificallyThe Act applies to all goods and services unless specifically

exempted by the Central Government.exempted by the Central Government.

It covers all the sectors whether private, public or cooperative.It covers all the sectors whether private, public or cooperative.

The provisions of the Act are compensatory in nature.

T

he provisions of the Act are compensatory in nature.

The setting up of the dispute redressal machinery was only toThe setting up of the dispute redressal machinery was only to

secure and enable speedy justice to the aggrieved consumers.secure and enable speedy justice to the aggrieved consumers.


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As Under section-6 of Consumer ProtectionAct,

consumer has the following rights:

It enshrines the following rights ofconsumers:It enshrines the following rights ofconsumers:--

Right to safetyRight to safety ::-- Right to be protected against the marketing of goodsRight to be protected against the marketing of goodsand services which are hazardous to health, life and property of theand services which are hazardous to health, life and property of the

consumer.consumer.

Right to be informedRight to be informed ::-- Right to be provided all those information onRight to be provided all those information onthe basis of which consumer decides to buy goods or services about thethe basis of which consumer decides to buy goods or services about thequality, quantity, potency, purity, standard and price of goods orquality, quantity, potency, purity, standard and price of goods orservices so as to protect the consumer against unfair trade practices.services so as to protect the consumer against unfair trade practices.

Right to be heardRight to be heard ::-- Consumer has the right that his complaint beConsumer has the right that his complaint beheard. Under this Right the consumer can file complaint against allheard. Under this Right the consumer can file complaint against allthose things which prejudicial to his interest.those things which prejudicial to his interest.


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Right to chooseRight to choose ::-- Consumer has the full right to buy good orConsumer has the full right to buy good or

services of his choice from among the different goods or servicesservices of his choice from among the different goods or services

available in the market.available in the market.

Right to Seek redressRight to Seek redress ::-- Right to seek redressal against unfair tradeRight to seek redressal against unfair trade

practices & unscrupulous exploitation of consumers.This Actpractices & unscrupulous exploitation of consumers.This Act

provides compensation to consumer against unfair trade practice ofprovides compensation to consumer against unfair trade practice of

the seller.the seller.

Right to consumer educationRight to consumer education ::-- Consumer education refers toConsumer education refers to

educate the consumer constantly with regards to their rights. In othereducate the consumer constantly with regards to their rights. In other

words, consumers must be aware of the rights they enjoy against thewords, consumers must be aware of the rights they enjoy against the

loss they suffer on account of goods and services purchased by them.loss they suffer on account of goods and services purchased by them.

The Act envisages establishment of Consumer Protection Councils atThe Act envisages establishment of Consumer Protection Councils at

the Central and State levels, whose main objects will be to promotethe Central and State levels, whose main objects will be to promote

and protect the rights of the consumers.and protect the rights of the consumers.


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Consumers Responsibilities

1. Consumer should exercise his right

2. Cautious consumer/ Do not buy blindly

3. Filing complaint for the redressal of genuine grievances

4. Consumer must be quality conscious/Do not compromise on quality

5. Advertisements often exaggerate/Beware of false advertisement

6. Do not forget to get Receipt and Guarantee/warrantee card

7. Do not buy in hurry


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ReliefAvailable To Consumers

Depending on the facts and circumstances, the Redressal

Forums may give order for one or more of the following relief :-

Removal of defects from the goods

Replacement of the goods

Refund of the price paid

Award of compensation for the loss or injury suffered

Removal of defects or deficiencies in the services

Discontinuance of unfair trade practices or restrictive trade

practices

Withdrawal of the hazardous goods from being offered to sale

Award for adequate costs to parties


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STRUCTURESTRUCTURE

To provide simple, speedy and inexpensive redressal of consumerTo provide simple, speedy and inexpensive redressal of consumergrievances, the Act envisages a threegrievances, the Act envisages a three-- tier quasitier quasi--judicial machineryjudicial machineryat the National, State and District levels.at the National, State and District levels.

National Consumer Disputes Redressal CommissionNational Consumer Disputes Redressal Commission -- known asknown as"National Commission"."National Commission".

ConsumerDisputes Redressal CommissionsConsumerDisputes Redressal Commissions -- known as "Stateknown as "StateCommission".Commission".

ConsumerDisputes Redressal ForumsConsumerDisputes Redressal Forums -- known as "Districtknown as "DistrictForum".Forum".


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District ForumsDistrict Forums have the Jurisdiction to entertain complaints:have the Jurisdiction to entertain complaints:

If the cost of goods or services and compensation asked for isIf the cost of goods or services and compensation asked for is up toup to

Rs. 20 lacsRs. 20 lacs..

State CommissionState Commission has the Jurisdiction to entertain complaints:has the Jurisdiction to entertain complaints:

It can hear cases involving sum exceedsIt can hear cases involving sum exceeds Rs.20Lacs and up to Rs.1Rs.20Lacs and up to Rs.1CroreCrore.. The State Commission also has the jurisdiction to entertainThe State Commission also has the jurisdiction to entertainappeal against the orders of any District Forum within the State.appeal against the orders of any District Forum within the State.

National CommissionNational Commission has jurisdiction to entertain complaints:has jurisdiction to entertain complaints:

It has a Jurisdiction to hear complaints amountingIt has a Jurisdiction to hear complaints amounting more than Rs.1more than Rs.1 CroreCrore..The National Commission besides entertaining the original complaintsThe National Commission besides entertaining the original complaintsalso has jurisdiction to entertain appeals against the orders of any Statealso has jurisdiction to entertain appeals against the orders of any StateCommission.Commission.


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Procedure onAdmission of ComplaintProcedure onAdmission of Complaint

The Period of Limitation prescribed for the filing ofThe Period of Limitation prescribed for the filing ofcomplaints before District Forum, the State Commission, orcomplaints before District Forum, the State Commission, orthe National Commission isthe National Commission is two years from the datetwo years from the date ononwhich the cause of action has arisen.which the cause of action has arisen.

On admission of a complaint, a copy of the complaint is to beOn admission of a complaint, a copy of the complaint is to bereferred to the opposite party within 21 days, directing him toreferred to the opposite party within 21 days, directing him togive his version of the case within 30 days. This period may begive his version of the case within 30 days. This period may beextended by another15 days.extended by another15 days.


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Brand Proliferation

when one company introduce new brands in

the same product lines and hence try to cover

each and every market segment for that

product line.

example: HLL has different brands in shampoo

product line offering a wide range of choicefor customer of every segment.


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Brand Rejuvenation

When marketers identifies that the declinestage for a brand has come and the concerned

brand is going to die

Marketer injects new life in brand by adding

new product features, packaging or by

changing STP strategies. This activity in whole

is called Brand Rejuvenation.

example: To Brand Rejuvente Hero Honda

Splendor company launched Hero Honda

Splendor NXG


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Hero Honda SplendorH

eroH

onda Splendor NXG


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Brand Cannibalization

When two brand in the same product line,

offered by same player target same market

segment and compete with each other by

eating away the market share without adding

any value to the marketer.

Example: Hero Honda Glamour and HeroHonda Splendor


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Hero Honda Glamour Hero Honda Splendour


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What is Cannibalization?

Cannibalization is a marketing concept that

acknowledges the fact that new product

growth is often gained at the expense of

existing products


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In marketing strategy, cannibalization refers to

a reduction in sales volume,

a reduction in sales revenue, e reduction in market share of one product

as a result of the introduction of a new

product by the same producer


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Cannibalization can be effective, by ultimately

growing the market, or better meeting consumer

demands. Cannibalization is a key consideration in

product portfolio analysis.

For example, when Coca Cola introduced Diet Coke, a

similar product, this took sales away from the

original Coke, but ultimately led to an expanded

market for diet soft drinks.


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Another example of cannibalization occurs

when a retailer discounts a particular

product. The tendency of consumers is to buy

the discounted product rather than competing

products with higher prices.When the

promotion event is over and prices return to

normal, however, the effect will tend todisappear. This temporary change in consumer

behavior can be described as cannibalization


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Another common case of cannibalization is

when companies, particularly retail

companies, open sites too close to each other,

in effect, competing for the same customers.

The potential for cannibalization is often

discussed when considering companies with

many outlets in an area, such as Starbucks orMcDonald's.


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Cannibalization is an important issue in

marketing strategy when an organization aims

to carry out brand extension.

Normally, when a brand extension is carried

out from one sub-category (e.g. Marlboro) to

another sub-category (e.g. Marlboro Light),

there is an eventuality of a part of theformer's sales being taken away by the latter


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However, if the strategic intent of such an extension is to

capture a larger market of a different market segment

notwithstanding the potential loss of sales in an existing

segment, the move to launch the new product can be termed

as "cannibalization strategy".

In India, where the passenger-car segment is going

dramatically since the turn of this century, Maruti-Suzuki's

launch of Suzuki Alto in the same sub-category as Maruti 800,which was the leader of the small-car segment to counter the

competition from Hyundai is seen to be a classic case of

cannibalization strategy.


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Life cycle of products


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Stages in the Product Life Cycle

The Product Life Cycle method identifies the distinctstages affecting sales of a product from the product's

inception until its retirement

Introduction stage.

The product is introduced in the market through a

focused and intense marketing effort designed to

establish a clear identity and promote maximum

awareness.

Many trial or impulse purchases will occur at this

stage.


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Growth stage.

Can be recognized by increasing sales and the

emergence of competitors.

At the vendor's side, the Growth stage is also

characterized by sustained marketing

activities.

Some customers make repeat purchases


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Maturity stage.

This phase can be recognized when

competitors beginning to leave the market.

Also, sales velocity is dramatically reduced,

and sales volume reaches a steady level.

At this point in time, typically loyal customers

purchase the product.


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Decline stage.

The lingering effects of competition,unfavourable economic conditions, new

trends, etc, often explain the decline in sales.


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The modern Product Life Cycle is becoming

shorter and shorter.

Many products in mature industries are

revitalized by product differentiation and

market segmentation.

Organizations increasingly reassess product

life cycle costs and revenues, because the time

available to sell a product and recover the

investment shrinks.


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Although the product life cycle shrinks, the operating

life of many products is lengthening.

For example, the operating life of some durable

goods, such as automobiles and appliances, has

increased substantially.

As a result, the companies that produce these

products must take their market life and service life

into account when they are planning.

Increasingly, companies are attempting to optimizerevenue and profits over the entire life cycle. They do

this through the consideration of product warranties,

spare parts, and the ability to upgrade existing

products

lecture 2 , consumerism (new trends in marketing )

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