Consumer and the Market€¦ · theoretical backdrop on the ‘consumer’ and the ‘market’....

Consumer and the Market

Dr. Sheetal KapoorAssociate Professor

Department of CommerceKamala Nehru College

University of Delhi

CENTRE FOR CONSUMER STUDIESINDIAN INSTITUTE OF PUBLIC ADMINISTRATION

New Delhi – 110002

Price: ̀ 50

ISBN : 81-86641-53-X

First Edition : 2005Reprint : 2008Revised Edition : 2017

Printed at : New United Process, A 26, Phase II, Naraina Indl Area, New Delhi-110028.

Published by : Centre for Consumer Studies, Indian Institute of PublicAdministration, New Delhi

Sponsored by : Department of Consumer Affairs, Ministry of ConsumerAffairs, Food and Public Distribution, Government of India.

Consumer Education Monograph Series

© Indian Institute of Public Administration, New Delhi

PREFACE

“Business has responsibility to itself, to its customers, workers,shareholders and the community…every enterprise no matterhow large or small, must, if it is to enjoy confidence andrespect…discharge its responsibilities in all directions. Businessmust be just and humane, as well as efficient and dynamic.”

— Lal Bahadur Shastri, 1965

The contemporary business environment presents numeroustemptations to the businessman. In their decision to produce and selland to make more profits traders resort to questionable tradepractices. Many transnational corporations are richer and morepowerful than the state that seeks to regulate them. It is increasinglybeing felt that corporations have responsibility towards the societyas a whole and there has been an increased focus on corporatesocial responsibility and ethical practices. Traders have to understandthat the key to building long lasting relationship with consumers isthe creation of superior customer value and satisfaction.

A balance has to be made between free market forces andconsumer protection. Every single purchase has an impact on theenvironment, consumer health and the workers who manufacturethe products. Thus, the need of the hour is to educate the consumersof their rights and responsibilities. This is a pre-purchase preventiveoption to avoid being exploited by the traders at the market place.

The consumer movement is a collaborative movement ofconsumers, government, business and society to ensure protectionof consumers from the unfair dealings of trade and industry. Problemsof defective goods, deficiency in service, spurious and duplicatebrands, misleading advertisements are rampant and often the gullibleconsumer falls prey to it. The United Nations Guidelines for ConsumerProtection were first adopted in April 1985 and provide Internationallegitimacy to consumer rights. They have been revised in the Year2015 and recognise that consumers often face imbalances in economicterms, educational levels and bargaining power and consumers have

iv

the right of access to non-hazardous products, as well as the right topromote just, equitable and sustainable economic and socialdevelopment and environmental protection. The UN Guidelines atpresent have broadened their horizon and want every member countryto have consumer protection policies regarding e-commerce andfinancial services.

The Government of India has taken huge initiatives for consumerprotection. Till now 24-pro consumer Acts have been enacted tocontrol buyer-seller relations in the market place. The Departmentof Consumer Affairs under the Ministry of Consumer Affairs, Foodand Public Distribution is responsible for the formulation of policiesfor consumer welfare in India. The ‘Jago Grahak Jago’ multi mediacampaign launched in the Year 2005 has been a huge success andthe slogan has now become a household name. In the Year 2015 thegovernment launched the Gama portal and to empower the commonman against misleading ads.

The monograph is organised in four Units. Unit 1 provides thetheoretical backdrop on the ‘consumer’ and the ‘market’. Unit 2introduces how as consumers we make purchases. It discusses theconsumer decision-making process and what motivates consumersto buy. Unit 3 examines the changes that have come in Indianconsumers buying behaviour after 1991. Unit 4 deals with certainpreventive measures which can be adopted by consumers in orderto avoid being exploited by the market.

I express my gratitude to Prof. Suresh Misra, Chair Professor(Consumer Affairs), and Coordinator Centre for Consumer Studies,IIPA for his encouragement and support in this relevant area ofacademic and professional endeavour. No words can be adequateto describe my gratefulness to him.

I am also thankful to Dr. Sapna Chadah, Assistant Professor(Administrative and Constitutional Law) and Dr. Mamta Pathania,Assistant Professor (Public Administration) for their cooperation.

My family members provided the necessary support during thecourse of the study. I take this opportunity to express my indebtednessto all of them.

Dr. Sheetal Kapoor

Place: NewDelhiDate: August 31, 2017

CONTENTS

PAGE

Preface iii

Introduction 1

Unit 1: Conceptual Framework 3

Unit 2: How Consumers Make Purchases 19

Unit 3: Changing Consumer Behaviour and Expectations 29

Unit 4: Self-Help through Consumer Education 36

References 45

Consumer and the Market

Dr. Sheetal KapoorAssociate Professor

Department of CommerceKamala Nehru College

University of Delhi

CENTRE FOR CONSUMER STUDIESINDIAN INSTITUTE OF PUBLIC ADMINISTRATION

New Delhi – 110002

Price: ̀ 50

ISBN : 81-86641-53-X

First Edition : 2005Reprint : 2008Revised Edition : 2017

Printed at : New United Process, A 26, Phase II, Naraina Indl Area, New Delhi-110028.

Published by : Centre for Consumer Studies, Indian Institute of PublicAdministration, New Delhi

Sponsored by : Department of Consumer Affairs, Ministry of ConsumerAffairs, Food and Public Distribution, Government of India.

Consumer Education Monograph Series

© Indian Institute of Public Administration, New Delhi

PREFACE

“Business has responsibility to itself, to its customers, workers,shareholders and the community…every enterprise no matterhow large or small, must, if it is to enjoy confidence andrespect…discharge its responsibilities in all directions. Businessmust be just and humane, as well as efficient and dynamic.”

— Lal Bahadur Shastri, 1965

The contemporary business environment presents numeroustemptations to the businessman. In their decision to produce and selland to make more profits traders resort to questionable tradepractices. Many transnational corporations are richer and morepowerful than the state that seeks to regulate them. It is increasinglybeing felt that corporations have responsibility towards the societyas a whole and there has been an increased focus on corporatesocial responsibility and ethical practices. Traders have to understandthat the key to building long lasting relationship with consumers isthe creation of superior customer value and satisfaction.

A balance has to be made between free market forces andconsumer protection. Every single purchase has an impact on theenvironment, consumer health and the workers who manufacturethe products. Thus, the need of the hour is to educate the consumersof their rights and responsibilities. This is a pre-purchase preventiveoption to avoid being exploited by the traders at the market place.

The consumer movement is a collaborative movement ofconsumers, government, business and society to ensure protectionof consumers from the unfair dealings of trade and industry. Problemsof defective goods, deficiency in service, spurious and duplicatebrands, misleading advertisements are rampant and often the gullibleconsumer falls prey to it. The United Nations Guidelines for ConsumerProtection were first adopted in April 1985 and provide Internationallegitimacy to consumer rights. They have been revised in the Year2015 and recognise that consumers often face imbalances in economicterms, educational levels and bargaining power and consumers have

iv

the right of access to non-hazardous products, as well as the right topromote just, equitable and sustainable economic and socialdevelopment and environmental protection. The UN Guidelines atpresent have broadened their horizon and want every member countryto have consumer protection policies regarding e-commerce andfinancial services.

The Government of India has taken huge initiatives for consumerprotection. Till now 24-pro consumer Acts have been enacted tocontrol buyer-seller relations in the market place. The Departmentof Consumer Affairs under the Ministry of Consumer Affairs, Foodand Public Distribution is responsible for the formulation of policiesfor consumer welfare in India. The ‘Jago Grahak Jago’ multi mediacampaign launched in the Year 2005 has been a huge success andthe slogan has now become a household name. In the Year 2015 thegovernment launched the Gama portal and to empower the commonman against misleading ads.

The monograph is organised in four Units. Unit 1 provides thetheoretical backdrop on the ‘consumer’ and the ‘market’. Unit 2introduces how as consumers we make purchases. It discusses theconsumer decision-making process and what motivates consumersto buy. Unit 3 examines the changes that have come in Indianconsumers buying behaviour after 1991. Unit 4 deals with certainpreventive measures which can be adopted by consumers in orderto avoid being exploited by the market.

I express my gratitude to Prof. Suresh Misra, Chair Professor(Consumer Affairs), and Coordinator Centre for Consumer Studies,IIPA for his encouragement and support in this relevant area ofacademic and professional endeavour. No words can be adequateto describe my gratefulness to him.

I am also thankful to Dr. Sapna Chadah, Assistant Professor(Administrative and Constitutional Law) and Dr. Mamta Pathania,Assistant Professor (Public Administration) for their cooperation.

My family members provided the necessary support during thecourse of the study. I take this opportunity to express my indebtednessto all of them.

Dr. Sheetal Kapoor

Place: NewDelhiDate: August 31, 2017

CONTENTS

PAGE

Preface iii

Introduction 1

Unit 1: Conceptual Framework 3

Unit 2: How Consumers Make Purchases 19

Unit 3: Changing Consumer Behaviour and Expectations 29

Unit 4: Self-Help through Consumer Education 36

References 45

CONSUMER AND THE MARKET

INTRODUCTION

Being a consumer is tough: but we cannot help being one.Consumers help the economy grow; growing economy offers newproducts and services from unheard of places, all claiming to be thebest. As markets are globalising and consumers are bombarded withtoo many choices of products and services, purchase decision-makingis becoming difficult. Increasing urbanization, rising incomes andaspirations for a better lifestyle, especially, among the lower economicstrata are some of the factors reshaping the Indian consumer market.E-commerce, net banking, mobile banking, debit cards, credit cards,ATMs on one hand are making the life of the consumer easier, butagain pose a challenge of safety and security. As consumers weneed to separate the chaff from the grains. There is a risk of beingcheated when we pay our hard earned money to get a sub-qualityproduct or service.

Thus, a balance has to be made between free market forcesand consumer protection. Any consumer movement can be successfulonly if the consumers are satisfied; they receive value for theirproducts and services. This in turn requires a synergy and support ofthe government, judiciary, traders, and consumers. India has gone along way by implementing the benevolent Consumer Protection Act,1986 and further making the rightful amendments in order to providebetter protection of consumers. An aware consumer is one whoexercises his rights, keeps a check on the unscrupulous traders whosell fake and substandard products or on advertisers who engage inunfair trade practices. Thus, self-help through empowered consumersand better corporate governance are the need of the hour for a bettersociety.

Michael Porter in his book “The Competitive Advantage ofNations” recognized the role of consumers in his famous DiamondModel Theory. He recognized that countries that have discerning

2 CONSUMER AND THE MARKET

consumers have better quality products. This gives these countries acompetitive edge. Thus not only does better quality products andservices help the consumers but it also helps the producers. Hence,according to Porter discerning consumers are one of the necessaryingredients for the competitiveness of nations1.

This monograph is an attempt to explain how a consumer fitsinto the economic rigmarole. It highlights how consumers, especiallyfamilies, an important consumption unit makes purchases. Theliberalization, privatization and globalization policy adopted by thegovernment in 1991 has given the Indian consumers wide choices inevery sector but the inherent profit motive of the businesses createshuge menace of market injustice. The monograph further discussesthe changes which are coming in the buying behaviour of Indianconsumers and how consumers can play an active role in the market.

UNIT 1: CONCEPTUAL FRAMEWORK

Who is a ConsumerThe moment a person comes in this world he starts consuming

products such as food, clothes, medical service, etc. Whether a personis a doctor, a student, a teacher, an architect, s/he is a consumer andthe whole economy operates for and around consumers. In simpleterms, a consumer is a person who consumes or uses any commodityor service available to him either from natural resources or througha market for final consumption.

A ‘consumer’ has been defined from different angles dependingon the discipline to which the author belongs.• Dictionary Meaning: The Oxford dictionary defines consumer,

as “a purchaser of goods or services”. As defined in BlacksLaw dictionary ‘consumer’ means, “one who consumes.Individuals who purchase, use, maintain and dispose of productsand services. A member of that broad class of people who areaffected by pricing policies, financing practices, quality of goodsand services, credit reporting, debt collection and other tradepractices for which State and Federal consumer protection lawsare enacted”. According to Wikipedia, “Consumer is a broadlabel for any individual or household who uses goods and servicesgenerated within the economy.”

• Business Definition: According to Stanton “a consumer is theindividual or organisational unit that uses or consumes product”1.

• Political Definition: According to John F. Kennedy, “Consumerby definition, includes us all. They are the largest economic groupaffecting and affected by almost every public and privateeconomic decision.”

• Legal Definition: In Morgan Stanley Mutual Fund vs KartikaDas2, Supreme Court has defined consumer: “The consumer, asthe term implies one who consumes. As per the definition,consumer is the one who purchases goods for private use or


consumption. The meaning of the word consumer is broadly statedin the above definition so as to include anyone who consumesgoods or services at the end chain of production. Thecomprehensive definition aims at covering every man who paysmoney as the price or cost of the goods and services.”

The Consumer Protection Act 1986 has defined the termconsumer through ‘goods’ and ‘services’. According to Section 2(1)(d) of the Consumer Protection Act, 1986 ‘Consumer’ meansany person who:1. Buys any goods for a consideration which has been paid or

promised or partly paid and partly promised, or under any systemof deferred payment and includes any user of such goods otherthan the person who buys such goods for consideration paid orpromised or partly paid or partly promised, or under any systemof deferred payment, when such use is made with the approvalof such person, but does not include a person who obtains suchgoods for resale or for any commercial purpose; or

2. (hires or avails of) any services for a consideration which hasbeen paid or promised or partly paid and partly promised, or underany system of deferred payment and includes any beneficiary ofsuch services other than the person who [hires or avails of] theservices for consideration paid or promised, or partly paid andpartly promised, or under any system of deferred payment, whensuch services are availed of with the approval of the firstmentioned person [but does not include a person who avails ofsuch services for commercial purpose].Explanation: Thus, ‘consumers’ includes the following heads:

1. Buyer of goods or purchaser of goods: Any person who purchasesproducts for consideration that has been paid, or promised orpartly paid and partly promised, or under any system of deferredpayment for final consumption is a consumer. The position of thebuyer depends upon the ‘contract of sale’.In Mohan Sharma v. Chandigarh Bottling Co3, thecomplainants purchased 5 crates of Limca for Rs. 440/ to beserved in their daughter’s marriage. After consuming them theguests were taken ill and started vomiting. The bottles wereexamined and found to be infected. The District Forum directed

SHEETAL KAPOOR 5

the refund of the amount paid and Rs. 200/ as compensation. Inappeal the State Commission increased the amount ofcompensation to Rs. 5,000.

2. User of the goods: Any person who uses goods with the approvalof the buyer, who has bought goods for consideration is aconsumer. Thus all family members are beneficiaries of a contractand included as consumers. In Dr. Sr. Louie and Am V. KannolilPathumma and Another4 the National Commission has held thatthe legal heirs who are entitled to the estate of the deceasedconsumer can file a complaint under the Act.

3. Hirer of services: Any person who hires or avails of any servicefor a consideration which has been paid or promised or partlypaid and partly promised, or under any system of deferred paymentis included as a consumer. The service sector includes banking,telecom service, postal service, insurance, railways, air travel,doctors, caterers, contractors, transport operators, etc.In Mohd. Suleman Ansari V. Shankar Bhardari5: Mohd Ansarisuffered a fracture in his hand and was taken to a medicalpractitioner for the treatment. He bandaged the fractured handand gave some medicines. Later on when the problem continuedfor a long time he was taken to other doctors for further treatmentbut unfortunately the affected hand became permanentlydamaged. The District Forum rejected the case taking the viewthat dispute should be settled in the civil court. The StateCommission allowed the appeal and ordered for a compensationof Rs 1, 50,000 and Rs 20,000 more for treatment and Rs. 5,000as cost for filing the complaint. The opposite party appealed inthe National Commission which rejected the appeal and askedthe medical practitioner to pay Rs 80,000 as full and final payment.

4. Beneficiary of services: In respect of services, the beneficiaryof such service is also a consumer. According to Indian MedicalAssociation v. V. P. Shanta case6 it was decided that medicalpractitioners are not immune from a claim for damages on theground of negligence. The patients who are rendered free serviceare the beneficiaries of the services hired by the patients whopaid for the services. In Spring Meadows Hospital vs. HarjolAhuluwalia (1998) 4 SCC 39, the Supreme Court held that a


consumer would mean a person who hires or avails of any servicesand includes any beneficiary. Therefore, when a young child istaken to a hospital by his parents and treated by the doctor thenthe parents and the child would come under the definition of aconsumer.

5. A trader or businessmen who buys the goods or services forresale is not a ‘consumer’. In Laxmi Engineering Works v.Industrial Institute the Supreme Court observed that commercialpurpose is a question of fact and should be decided based on thebasis of facts of the case.7 The Consumer Protection ActAmendment in 2002 excludes persons who buy goods or servicesfor a ‘commercial purpose’. However, ‘commercial purpose’ doesnot include the following:

i. Goods bought and used for the purposes of earninglivelihood by means of self-employment. This means thatif an individual or a family buys goods for professionalor vocational use s/he will be a ‘consumer’.

ii. Services availed for the purpose of earning livelihoodby means of self-employment. This means that if a personor family buys services for professional or vocationaluse s/he will be a ‘consumer’. Thus, any person whobuys goods either for resale or for making profit is not a‘consumer’ under the Consumer Protection Act. In RajKumar vs. S. C. Verma, 2001 (1) CPR 437 it was heldthat persons buying goods either for resale or for use inlarge scale profit-making activity would not be‘consumers’ entitled relief under the Act.

In the proposed new Consumer Protection Bill, 2015 the definitionof consumer has been broadened “to include buying of goods, hiring/availing of services inclusive of the transaction made through anymode, inclusive of but not limited to offline, online through electronicmeans, teleshopping, direct selling etc.”

What is a MarketA country’s economy revolves around its markets. Originally

the term market stood for the place where buyers and sellers gatheredto exchange their goods, such as a village square. In common terms

SHEETAL KAPOOR 7

we say a market is a place where we go for shopping such as, SouthExtension, Kamala Nagar, Lajpat Nagar markets in Delhi. But withthe development of internet and e-commerce purchases can be madeby viewing the products on the website itself. Thus, now the marketsare no more physical places where buyers and sellers come in contactwith each other. According to Kotler and Armstrong, “A market isthe set of actual and potential buyers of a product. These buyersshare a particular need or want that can be satisfied through exchangerelationships.”

Markets are further divided into various categories such as:• Consumer markets: Companies selling mass products and

services, such as, tooth paste, soaps, television sets, air tickets,etc. for personal consumption of the consumer-individuals andfamilies constitute consumer markets.

• Business markets: Business buyers purchase products forcommercial purpose. They buy goods either for their utility inenabling them to make or resell a product to others in order to re-sell and make profits.

• Global markets: Companies selling their products in variouscountries are included in the global markets. They may enter theforeign country as an exporter, or through contractual agreementsor mergers and acquisitions or solo manufacturer.

• Nonprofit and Governmental markets: Companies selling theirgoods to non-profit organizations such as, universities, charitableorganizations, government agencies are included in this. Theseare known as institutional markets.

In case of a monopoly market or a seller’s market the consumerdoes not enjoy any choices and its exploitation is at its peak. Earliertraders were only concerned about making a product and doingaggressive marketing of it, they believed that by this the productwould sell on its own. No attempt was made by them to understandthe needs and desires of the customers. Henry Ford in 1909 himselfremarked when he offered the Model T Ford to all buyers “Anycustomer can have a car painted any colour that he wants so long asit is black.” Similarly till 1960’s Coca Cola produced only one drinkfor the whole market, presuming it would appeal everyone. Butgradually marketers have moved from mass marketing to segmenting


the market and customer is the pivot around which all good companiestake their decisions.

Further when the market constitutes large number of buyersand sellers, consumers are sovereign. In a free market economy, theconsumers enjoy huge choices in the market place. Whenever thereis a demand for a product, seller readily supplies it in the market.The consumer enjoys the choice of returning the purchased producton the ground of unsatisfactory service.

Classification of MarketsIndian consumer market is broadly segregated into urban and

rural markets, and is attracting marketers from across the world.Multinational corporations consider India as one of the key marketsfrom where future growth is likely to emerge. The growth in India’sconsumer market is primarily driven by a young and huge middleclass and increasing disposable incomes. A recent study by theMcKinsey Global Institute (MGI) suggests that if India continues togrow at the current pace, average household incomes would tripleover the next two decades, making the country the world’s fifth-largest consumer economy by 2025, up from the current 12th position.

According to a report by Boston Consulting Group (BCG) andthe Confederation of Indian Industry (CII), India’s robust economicgrowth and rising household incomes would increase consumerspending to US$ 3.6 trillion by 2020. The maximum consumer spendingis likely to occur in food, housing, consumer durables, transport andcommunication sectors. The report further stated that India’s shareof global consumption would expand more than twice to 5.8 per centby 2020.8

India remained the leader among all nations in the global consumerconfidence index with a score of 131 points for the quarter endingDecember 2015, followed by the Philippines (117), Indonesia (115)and Thailand (114). Consumer confidence in India has remained highfor nine consecutive quarters. Further, in the discretionary spendingand savings category, nearly three out of every five respondentsfrom India indicated the next 12 months as being good to buy, thusensuring once again that India leads the global top 10 countries forthis parameter during the quarter.

The markets can further be divided on the basis of geography

SHEETAL KAPOOR 9

and sociological characteristics into two broad areas. These include:1. Urban Markets2. Rural Markets

A Urban MarketsThe urban market is characterized by large contiguous settlement

units of town or agglomerations, mostly concentrated. Further urbanmarkets have sophisticated infrastructures (such as roads, electricity)having a high density of population per square kilometer and goodphysical connectivity and mobility. The Census of India defines urbanareas having the following features9:

i. a minimum population of 5,000;ii. at least 75 per cent of male working population engaged

in non-agricultural pursuits; andiii. a density of population of at least 400 per sq. km. (1,000

per sq. mile).An urban consumer is totally dependent on the market for meeting

his basic needs, such as, food, water, clothing, etc. When there is ashortage of electricity s/he buys, inverters, generators, etc. Frompurchasing a tooth paste, to bread and butter to medical care, electricitysupply, water, etc. the consumers requirements are met by the market.S/he enjoys more choices of products and services as compared toits rural counterparts. Some of the common characteristics prevalentin urban consumers are:• Market Dependence: Urban consumers are dependent on the

market from morning to evening to fulfil their needs. From basicnecessities, to education, entertainment, etc he relies on themarket.

• Purchasing Power: Urban consumers have more disposableincome with which they can afford to buy goods and serviceswhich they don’t really need. The market recognizes this factorand offers many luxury products, to make them splurge money.

• Excessive Consumption: There is a paradigm shift in the lifestyleof urban consumers. In the Year 2013 in urban India credit cardspending (in value terms) has been Rs 1.23 lakh crore and debitcard spending (in value) has risen six times to Rs 74,400 crore.The number of processing terminals also have doubled to 9.5lakh in 2013.10


• Waste Generation: Excessive purchasing power leads to overconsumption and generation of waste. Urban consumers aredelinked from the environment and make use of ‘buy and throw’approach. India’s urban population which is around 37.7 croregenerates major non-biodegradable waste. Discarded paper,plastics, cardboard, tin, metal packaging are a part of wastegenerated in urban areas.

• Media Influence: Urban consumers are strongly influenced byadvertising through mass media such as, television, radio,newspapers, magazines, internet, etc. The use of internet, e-commerce and social media sites also have an impact on thebuying behaviour of urban consumers. The urban consumer ishighly image conscious and tries to imitate celebrities in its life-style. The media on one hand gives him information of the latestproducts and services available in the market and on the otherhand, shows a glamorous picture of comfort and prestigeassociated with the product. This leads to excessive consumption,hoarding products not required, which ultimately changes thebuying habits. Now in urban India mobile phones have penetratedinto each household.

Paradigm Shift in the Urban Consumers' LifestyleA recent study by the McKinsey Global Institute (MGI) suggests

that if India continues to grow at the current pace, average householdincomes would triple in the next two decades and it would becomethe world’s 5th largest consumer economy by 2025, up from 12th

now.11 Growing urbanization, increasing incomes and rising aspirationfor a better life, especially, among the lower economic strata aresome of the factors reshaping the Indian consumer market. Theresult of this change is a new Indian consumer who is more discerningthan ever, ready to spend money on expensive brands, looks forquality and convenience and is willing to explore the organized retailmarket. Some of the factors which are bringing this shift are:• With high rate of industrialisation, better employment opportunities

and increased disposable income, a drastic change has come inthe lifestyle of Indian consumers. Urban Indians are becomingmore brand conscious and desire a better standard of living.According to Census Report 2011, there are about 500 million

SHEETAL KAPOOR 11

Indians who are below 25 years. Easier access to money hasgiven them a significant purchasing power and driving growthand demand for products. The mantra followed by them today is“working hard and spending luxuriously’.

• Availability of easier consumer credit and loans are other factorswhich are leading younger generation to splurge money on realestate, consumer durables and luxury products.

• Indian retailing is totally changing and the forces which are leadingto this changes are the changing needs and aspirations of theconsumers. According to the KPMG report, the working agegroup of 15-54 years is the largest spender on retail and as perthe Census Report of 2011, more than 50 per cent of India’s totalpopulation falls under this group, indicating the significant influenceby this segment.

• With growing employment opportunities and a huge Englishspeaking population a number of jobs are outsourced in India andthe young Indians are making good money. With good paypackages the youth need certain place during weekends to hangout or to splurge.

• There is a drastic shift in the Indian consumer’s mindset. TheIndian consumer, market which is dominated by young customerswhich are highly brand conscious. They are spending less onfood and day to day items and more on clothing and durablegoods. There is an emergence of a consumer who does not blinkwhile buying a pair of sports shoes for Rs. 5,000 or more.

• The growth of malls has led the consumers to go for impulsepurchases or buying items which they might not need immediately.

• Some of the consumers are attracted to these malls because offreebies and once they are inside the mall they don’t mindsplurging on items, which are not for immediate needs. Thoughthe dynamic transformation is going on but definitely retail storesand malls have been transforming the retail industry fromunorganized to organized.

• India has a large and aspirational middle class and its disposableincome has increased significantly, which is resulting in asubstantial change in their spending habits and purchasing power.


Other factors such as rising internet penetration of the retailersoffering a high class shopping experience, rapid real estateinfrastructure development, new product innovation, growinginterest of investors have brought changes in urban markets.

Growing Consumerism in Urban IndiaConspicuous consumption has traditionally been discouraged in

India. But in India, festivals and religious sentiments are very strongand people splurge during that time. As more and more young peoplestart living in the present, not saving for the future unlike their parents(a behaviour consumer researchers call “Hinduistic self denial”) thefestivals are becoming commercialised with a lot of activityeverywhere to attract the consumers to make most of the festivalssuch as, Dushera, Diwali, are becoming commercialized. Durga PujaPandals are congregated around counters selling life insurance,pharmaceuticals that relieve stress, DVD music stalls and promotionsfor home appliances. A similar lack of reverence is apparent at theNavratri festival in Gujarat, another regional festival, in which peopleperform traditional “dandiya” dances until dawn. Marketers try topromote their brands or give their products as prizes to the winners.Almost two-thirds of annual urban Indian consumer spending takesplace in the festival months of October, November and December.12

Malls have changed Shopping Experience• India offers an immense market opportunity because of increased

income and changed lifestyle of middle class families. In 2001there were just three malls in India. The number grew to 343 by2007. As of May 2013, India had a total of 570 operational malls.As per the data from Bangalore-based Asipac Consulting, numberof malls in 2013 has doubled since 2008.13

• Malls are not only a shopping place but a place to rejuvenate,socialize and entertain. In big retail stores one gets everythingunder one roof from branded clothes, grocery, electronic itemsto foot wear. Malls have changed the shopping experience ofIndians. Doing shopping in the scorching heat of the sun hasbeen replaced by air conditioned shopping. Visiting malls andbuying branded products satisfies consumers need for betterquality of life. Shopping malls are bringing in a new culture in

SHEETAL KAPOOR 13

India which is different from the traditional culture as far asshopping is concerned. Malls are seen as shopping centres aswell as family entertainment centres having amusement section,food court, and retail.

• Some of the largest malls in India are: Select Citywalk Mall,Saket, Delhi, Ambience Mall Gurgaon, Phoenix Market CityMumbai (Mumbai, Maharashtra), Metro Junction Mall (Kalyan,Maharashtra), LuLu International Shopping Mall (Kochi, Kerala),The Great India Place (Noida) and Z Square shopping Mall(Kanpur, Uttar Pradesh).

• Malls have changed the lifestyle of consumers in India and helpedthe retail sector to become more organized. But some analystswarn that too many malls are being built, creating a bubble that islikely to burst. But many will survive, providing new opportunitiesfor investors and retailers, and slowly changing the way Indiansgo shopping.

Growth of Malls in Urban IndiaAmong the cities, Delhi and Mumbai lead the rest of the country

in terms of the highest concentration of shopping malls, accountingfor 62 per cent of total malls in India. They are followed by Chennaiand Bangalore, which together constitute around 20 per cent of built-up mall space in the country. In 2013, net addition of approximately5.2 million sq feet of mall space was registered, translating into a 22per cent increase in comparison to the previous year. Chennai ledwith creation of nearly 2 million sq feet of fresh supply, followed byMumbai and Pune.14

Design TrendsOn the development side, the malls previously suffered from a

lack of institutional funding, foreign players and organized retail chains.But now the average size of malls is increasing in the coming yearsas developers are focusing on project sizes that allow for a criticalmass in terms of various formats and categories under one roof. In2014, the average size of malls was estimated at around 3.8 lakhsquare feet, which increased to 4.7 lakh square feet in 2015 andexpected to further increase to 6.6 lakh square feet in 2017.

There is also an increasing trend among upcoming malls to adopt


a structured approach in planning, execution and launch. This hasenabled them to cash on retailer interest in upcoming projects thatoffer not just a good location, but have been optimised in terms ofdesign and their trade and tenant mix. Although 2015 wasn’t a greatyear for the retail-realty sector in India, as not many Malls werelaunched during the year. The online attack has impacted the sectorand the retail business overall has been under a grey cloud. Thoughthe rental revenues have not yet impacted, there is a huge and avisible impact on the footfalls in the malls, because of the hugediscounts offered by online retailers. With increasing population,shifting lifestyles, lengthy working hours and shrinking free time, it isdefinite that destination malls and neighbourhood malls will growdynamically. The mall business would pick up in Tier II and III cities.Retailers would be revisiting their strategies and have a flexibleapproach, customised to different micro-markets.

Rural Markets15

“The spirit of India lives in its villages” has been rightly saidby Mahatma Gandhi. Two-third of India’s consumers live in ruralareas and almost half of the national income is generated here. Ourcountry is classified around 655 districts and approximately 6,40,000villages, which can be classified on the basis of different parameterssuch as, literacy levels, accessibility, income levels, penetration,distances from nearest towns, etc. There is no specific definitionwhich defines what a rural area is. Definitions for rural India aboundwhile the most convenient one is, ‘anything that is not urban’, isconsidered as rural.16

In the 1970s, Nirma launched its low-priced detergent forconsumers who had low income, especially for the rural population.Till then most of the products manufactured were aimed for theurban middle class and elite. But there existed a huge potential forlow-priced products targeted for rural population. This concept wasthen extended and explained in a brilliant way by C.K Prahlad in hisbook “The Fortune at the Bottom of the Pyramid” according to whomthe world population can be represented in the form of a Pyramidwith the elite class lying at the tip of the pyramid, the middle and theupper-middle class lying in the mid-area of the pyramid and the lowerclass, which consists mainly population in rural areas, lying at theBottom of the Pyramid.

SHEETAL KAPOOR 15

Rural marketing has become a key area of focus of the corporatesector, off late due to the vast potential it has mainly in terms ofmarketing of Fast Moving Consumer Goods (FMCG), durableproducts, telecom, electronics. Companies such as, HindustanUnilever, Dabur, Coca Cola, Pepsi, Britannia, Colgate Palmolive,Samsung, Airtel, Vodafone are coming up with new strategies andconcentrating their activities in the rural markets.

Characteristics of Rural Markets• Large and scattered market: The rural market of India is large

and nearly 50 per cent of the villages in the country do not haveproper roads.

• Low Literacy: It is difficult to educate the potential consumersin rural market about products due to low level of literacy.

• Seasonal Demand: Monsoon being the harvesting season inIndia and agriculture being the primary occupation of majority ofthe rural population the demand for goods is majorly restricted induring the monsoons when the income is comparatively high.

• Major Income from agriculture: Nearly 60 per cent of therural income is from agriculture. Hence rural prosperity is tiedwith agriculture.

• Traditional outlook: The vast majority of rural consumer’s valueold customs and traditions.

• Diverse socio-economic backwardness: Rural consumershave diverse socio-economic backwardness which is differentin different parts of the country.

• Many languages and dialects: the number of languages anddialects vary widely from state to state, region to region, andfrom district to district. Even though the number of recognizedlanguages are only 16, the dialects are estimated to be around850. People are not educated enough to know one commonlanguage like Hindi or English and it is difficult for the companiesto prepare promotional advertisements in every local language.

• Transportation and Distribution: The poor state of ruralinfrastructure is one of the major concerns of most of thecompanies planning to invest in this sector. Though the ruralpopulation is vast it is not possible to form an effective distribution


system and reach out to a considerable number of targetconsumers.

Opportunities available in the Rural MarketsThe Indian rural market with its vast size and demand base offers

a huge opportunity for the marketers. With 83.3 crore households,the rural population is nearly three times the urban. Because of certainsocio-economic changes the rural consumer has become aware aboutits needs and upgradation of its standard of living. Informationtechnology, government policies, corporate strategies and satellitecommunications are the factors responsible for development of therural markets.

The rural market accounts for around 70 per cent of toilet soapusers and 38 per cent of all two-wheeler purchased. Some of theFMCG companies such as Proctor and Gamble, Reckitt Benckiser,Adani Wilmar, Dabur, Eveready Industries, Johnson & Johnson andGodrej have reaped huge because of the rural boom.

A Dramatic ChangeVillagers who used to crack open peanuts are now demanding

chocolates, charcoal teeth are a rare sight, so is the case with twigsof neem and babul tree. Today, the ultra bright shine of Colgate orsome international brand holds more appeal than the traditionalmethods of cleaning teeth (like tooth powder or ‘Dant Manjan’) inrural areas. Consumerism and globalisation is invading parts of ruralIndia and the villages which were once inconsequential dots on maps,are now connected with telephone and internet getting the attentionof global marketing and media planners.

Features of Indian Rural MarketThe Indian rural market with its vast size and demand base offers

a huge opportunity for the marketers. Almost 70 per cent of theIndian population lives in villages and rural areas. Rural Indiaconsumes almost 60 per cent of the total goods manufactured inIndia with majority of the products coming from FMCG sector.Because of certain socio-economic changes the rural consumer hasbecome aware about its needs and up gradation of its standard ofliving. Information technology, government policies, corporate

SHEETAL KAPOOR 17

strategies and satellite communications are the factors responsiblefor the development of the rural markets.

A Case Study of Sachet MarketingSachet marketing is selling products in small amounts which has

motivated the attention of the rural consumers. Marketers have foundthat the rural consumers who cannot afford products in largecontainers that would last weeks to finish, would buy them in small,single-serve sizes. It was the brand CavinCare which came out withan innovative idea of manufacturing small sachets of shampoo pricedat 50 paisa. Suddenly shampoo which was not at all a popular productin rural areas had high demand in the market.

One key reason why sachet marketing is popular in rural marketsis that small package sizes involve lower costs per purchase and less“capital” bound in the storage rooms of poor households. Since ruralhouseholds have to struggle to manage their cash flow on a dailybasis, these factors have made sachets attractive for rural customers,allowing them to purchase quality products such as sachets ofshampoos, soaps, creams, hair dye, tooth paste, detergents, tea,coffee, etc. Further sachets are cheaper on a per-unit basis such asper-gram, or per-litre basis as compared to products sold in largerpacks. A 2009 study by Ramendra Singh, found shampoo in India tobe up to 50 per cent cheaper per ml when sold in sachets. Some ofthe FMCG companies such as Proctor and Gamble, Reckitt Benckiser,Adani Wilmar, Dabur, Eveready Industries, Johnson & Johnson andGodrej have reaped huge profits because of the rural boom but thereis a need to use this concept further for selling micro-credits, mobilephone offerings, farming materials.

Problems Faced by Rural Consumers regarding UnethicalMarketing Practices

Many rural consumers are illiterate and are easily vulnerable tothe unscrupulous and unethical marketing practices of the greedymarketers.• Prevalence of spurious brands and seasonal demand: for

any branded product there are a multitude of ‘local variants’ whichare cheaper and therefore, more desirable to villagers. Sub-standard and spurious products are being passed on to the ruralconsumers under the brand name which are deceptively similar


to the popular brand names. For example, ‘Calgote’ for Colgate,thus violating the provisions of the Trade Marks Act.

• The Drugs and Cosmetics Act forbids the making of any tallclaims or magical effect about any drug. Severe penalty isprovided for an offence under the Act. However, the ruralconsumer is gullible to quacks, fake ayurvedic drugs andcosmetics.

• Misleading and Deceptive Pricing: since the rural consumerslack product and price information and possess less bargainingpower and buying insight they are being deceived by the traders.On the pack of the products the ‘MRP’ the maximum retail priceis printed but many rural consumers do not check that. As providedby the Consumer Protection Act no dealer can charge more thanthe MRP of an item although they can reduce the price to anyextent.

• Misleading Advertisements: The prohibition of drugs andmagic remedies is often openly flouted in the rural areas wherethe quacks and unscrupulous traders play with the lives of peoplewith impunity.

• Distribution of Goods: Certain products which are advertisedin the rural areas or through the local media are not availablewith the vendors and sometimes the in-transit time may even bemore than 15 days, so that the villagers have to go for someother substandard brand.Thus there are specific problems of consumers related to both

the markets and as marketers are increasingly penetrating to therural markets protecting the consumers against counterfeits, sub-standard and spurious brands is a big challenge. The last unit isdevoted towards various preventive measures which can be takenby the consumers to avoid being cheated by the market.

Everyday we buy numerous products from the market, somedecisions are rational and others are emotional. The next unit makesthe readers aware of how the consumers make purchases from themarket.

UNIT 2: HOW CONSUMERS MAKEPURCHASES

Everyday we buy various products from the market. Whilepurchasing products it is important to know about the involvementof the consumer in the buying process. If the product is of low valuesuch as, soap, salt, etc consumer involvement is minimum. In caseof big-ticket items such as, cell phones, car, television the consumeris highly involved because he is spending a lot of money in purchasingthat product or service. Out of his limited money income he prioritieshis needs, allocates a budget for buying commodities, searchesinformation about various brands, prices, reputation of the stores,after sales service available. He then evaluates the various alternativeswhich are available and then buys a high-value item. All buyers aremotivated by various reasons when they make purchases. The variousmotives which make people purchase products and services havebeen discussed below.

Why Consumers BuyMotivation is the driving force within individuals that impels them

to action. Marketers and traders are always interested in knowingand understanding why consumers spend their money as they do.Individuals buy products and services for many reasons and differentpeople can have different reasons for purchasing the same product.For example, a pair of shoes may be bought by Mr. A for suitabilityand convenience whereas, Mr. B might buy the same shoe for styleand appearance and to match it with his dress. Mr. C might buyshoes because of its price and quality. Thus, different consumersare motivated by different reasons to purchase the same product.Buying motives seeks an explanation of why consumers buy whatthey buy.17 Some of the buying motives which are prevalent for buyingany product or service are18:• Desire for Gain: A lady lecturer may be motivated to purchase

a microwave oven in order to reduce the cooking time. A student


may be motivated to pursue an MBA course so that she can geta good job in the corporate sector in future.

• Fear of Loss: When the consumer purchases products as ameans to prevent pain, loss, risk, embarrassment, mistakes,unpopularity, worry, or unhappiness he is said to make purchasesbecause of fear of loss. Purchase of insurance policies, burglaralarms, car-steering locks, etc are motivated by fear of loss.

• Comfort and convenience: Consumers are motivated to buyproducts such as, car to avoid traveling by public transport, washingmachine to avoid washing clothes by hand.

• Security and Protection: Many purchases are motivated bythe desire to avoid physical harm to ourselves, our loved onesand our property. An individual may buy a home exerciseequipment, an annual physical examination, a back-up computerdisks, a fire extinguisher in order to protect himself.

• Pride of Ownership: Although certain purchases are not easyto be logically justified but they give a sense of pride to the owner.Purchase of a luxury car, designer clothings and furniture, acollection of antique paintings are purchases which are driven bypride and status. Consumers are ready to pay a premium in orderto purchase them.

• Satisfaction and Emotion: Everybody wants to gain love andaffection from others. We look for approval, ratification, praiseand love from our dear ones. Sending greeting cards, flowers,throwing parties, buying gifts make people feel good aboutthemselves.

• Individuality: Desire to be distinct from others, is one of theimportant emotional buying motives. Sometimes, customers buycertain things, because they want to be in possession of things,which are not possessed by others. Purchasing of designerdresses, customized products is because of the desire of peopledistinctiveness or individuality.

• Appearance of the Shop: Appearance of the shop is one of theimportant emotional patronage buying motives. Some people maketheir purchases from a particular shop because of good orattractive appearance of the shop.

SHEETAL KAPOOR 21

• Display of Goods in the Shop: Attractive display of goods inthe shop also makes the buyers buy from a particular shop.Thus, all purchases are backed by various motives and even if a

purchase may look rational but it is backed by some emotion also. Apurchase is said to be rational when it is backed by reasons ofeconomy, durability or efficiency. But in real life it is very difficult toseparate the irrational from the rational. Suppose a boy decides togive a present to his girl friend and shops all around the storesthoroughly and systematically. He is driven by both emotional andrational motives.

Post-Purchase DissonanceWhen individuals choose between two or more alternatives,

anxiety or psychological disturbance occurs because the decisionhas unattractive as well as attractive features. After making decisionsto purchase a particular brand, people expose themselves toinformation that they perceive to support their choices, and avoidinformation which is likely to favour rejected alternatives.19

Almost all purchases result in cognitive dissonance. After thepurchase a consumer may seem to be satisfied with the benefits ofthe chosen brand and may be glad to avoid the drawbacks of thebrands not bought. However, every purchase involves compromise.A consumer may feel uneasy about acquiring the drawbacks of thechosen brand and about losing the benefits of the brands notpurchased Thus, consumers feel at least some post purchasedissonance for every purchase.

For example, if a person purchases a new ‘Maruti’ car and makesa down payment for it he might experience cognitive dissonance if s/he thinks of the unique positive qualities of the brands not selected.S/he requires reassurance from others that s/he has made a wisedecision, that the car is excellent for the price s/he paid, and that heis a wise buyer. Thus, a buyer may start doubting the choice of hisbrand and experiences anxiety over the decision. Thus, all the positiveattributes of the cars s/he considered (such as, Tata, Huyndai, Fiat)but did not purchase and all the negative aspects of his purchasedvehicle (Maruti) are dissonant with the purchasing behaviour. In hisseeking reassurance from friends that his purchase was a wise one,s/he is attempting to reduce the post-purchase cognitive dissonance.


Assuming that a purchaser of ‘Maruti’ experiences dissonanceand looks for reassurance, he is highly receptive to advertisingprovided by the manufacturer. In the advertisement for the ‘Maruti’car, which he has just purchased, the superiority of the product andthe sharpness of his decision would be shown. Consumer’s dissonancemay increase because of the following reasons:• When the purchase is expensive.• When there is a greater similarity between the item selected and

item(s) rejected.• When the purchase decision is very important.

Thus, buying a house or car would create more dissonance thanbuying a soap or bread.20 A trader can relieve post-purchaseuncertainty of the consumer by the following methods:1. By including messages in its advertising specifically aimed at

reinforcing consumers’ decisions by complimenting their wisdom.2. The salesmen can emphasis the advantages of the product

purchased, while stressing the disadvantages of the forgonealternatives. Moreover he can show that many characteristicsof the chosen item are similar to products the buyer has forgone,but which are accepted by the reference group.21

3. By offering stronger guarantees or warranties.4. By increasing the number and effectiveness of its services.5. By providing detailed brochures on how to use its products

correctly.Thus, some marketers provide reassurance through congratulating

recent buyers and reviewing strong product attributes in the manualsprovided to new purchasers. Several automakers publish specialeditions of magazines focused on recent purchasers and are givenfree of charge to them. Even salespersons of consumer durablesare often instructed to call their recent buyers within a day or soafter purchase, to offer further information and assurances.

In a society family acts as a major consumption unit, wherelimited money income and needs of the various members have to bekept in mind. Thus, understanding the family dynamics is veryimportant.

SHEETAL KAPOOR 23

Family as ConsumersAs defined by the Bureau of the Census of the U. S., “a family

consists of two or more persons related by blood, marriage or adoptionand living together.”22 Family decision-making involves decisionswith regard to how family members interact and influence one anotherin terms of individual, family or household purchases.23

Family DynamicsFamilies play an important role in the market as consumption

units. Members in a family influence the decision-making process inthe purchase of different products. This is especially true for high-value items, such as, consumer durable products that are used byseveral members in the family. Even when members of a familymight be leading their own lives and, pursuing their own dreams, andwhen their tastes are different, the bond that exists between themcontinues to be very strong. This is mainly because of the followingthree reasons:

1. The consumption of a product may be personal, but itschoice is not. Every family member looks for the approvaland ratification of his choice from the other members.For example, a father may not buy a pair of sneakers ifhis son does not approve of it. Or a wife would not buy adress if her husband does not approve of it.

2. Often the family consumption decisions are dependenton one another. In most families, the needs of variousmembers as also their desire to purchase new productscannot be satisfied by the family’s limited income. Thisnecessitates an allocation of family resources and atrade-off among all the desired products and services.

3. Many products are purchased for the collective use andconsumption of the family. This is because the traditionalboundaries between the roles assigned to the differentmembers of the family often disappear.

Due to liberalization, media explosion and certain societal changesin India, roles of different family members are shifting. Decision-making is becoming more democratic and children are more and


more active participants in the Indian homes. Marketers are alsoprojecting children in their communication strategies.

Children as ConsumersNow-a-days children are called upon to make decision not only

about their own purchases but also purchases made by the familyunit. Not only do they spend money on snacks, sweets, toys, gamesand clothes, but also are major influencers in a wider array of familypurchases. Earlier, parents used to consult children with regard toproducts directly meant for them but children today are more activeparticipants in the various purchase decisions being made in thehouse. According to the American Psychological Association“Children under eight years are unable to understand that televisionadvertisements are not real and need to be protected from seeingthem.24

Nowadays, says Rakefet Strauss, General Manager, Insight“Kids have influence over purchases in all kinds of new categories.They become the center of family aspirations, and parents are moreoriented in investing in children.25 Pester power is the new buzzwordin marketing and the marketers have realized that the child is the keyto loosen his parents’ purse-strings. According to Solomon, “by theage of eight a child acquires all the skills to become an independentconsumer and these skills come from three main sources: parents,peer and television.26

As per Census of India, 2011, children under 15 years of ageconstitute 36 per cent of our population. The large base of its agepyramid shows that for many years Indian population will continueto have a large number of young population. It is predicted that Indiawill become the world’s 5th largest consumer market by 2025(McKinsey Global Institute, 2007). The three major emergingsegments identified in India are kids, youth (including the youngworking singles) and urban Indian women. (Spencerstuart, 2008)India occupies an important position on the globe today and giventhis background India offers a unique environment for the presentyoung generation whose exposure to the world is completely differentfrom its earlier generations. In India the bulk of incomes, expendituresnow occur in urban areas even if they benefit rural residents. This isbecause urban areas are where the largest markets are and it ishere that the latest fashion and lifestyles are created. Today it is not

SHEETAL KAPOOR 25

rural India that defines our lifestyle but urban India that is impactingrural lifestyles.

Children in India constitute 18.7 per cent of the World kidspopulation and one third of our country’s population is under the ageof 15 years. Thus in India, children form a massive 30 per cent ofthe total population and this segment is growing at a rate of four percent per annum. This means a huge target market of 300 million isavailable to advertisers and they are already focusing on the kidchannels. The potential children market consists of 23 per cent ofthe population. The kids’ wear segment is one of the fastest growingin the country’s apparel industry. KPMG estimates the size of thekids’ wear market in India at Rs 28,000-30,000 crore, and expects itto reach Rs 43,000 crore by 2016 and Rs 72,000 crore by 2021.

Factors Leading the GrowthIn an analysis on “Market of Indian kids wear”, it has been

pointed out that kids fashion has percolated down to Tier II and TierIII cities like Dehradun, Chandigarh, Pune, Nashik and Indore,Varanasi etc. Rising income levels, trend towards nuclear familiesand potential desire to offer the best to their children are some of thefactors attracting consumers to buy branded and fashionable clothes.27

These can be explained as follows:• Children as independent buyers: Children play an important

role as independent buyer groups. They are influenced by massmedia and peer pressure, and are more informed and self-conscious. They are aware of branded products and brands andmarketers are realizing their potential and are increasing theirpresence in this segment of children’s apparel includes clothingfor kids between one and 14 years of age. The market for girl’swear is far greater than boy’s wear throughout the world. Boy’sapparel tends to focus on basics. Girl’s wear, however, thrives inall channels from specialty stores to department stores todiscounters.

• From the Manufacturer’s Perspective: Low stitching andmanufacturing costs and relatively less competition are the primereasons for international brands luring Indian market.

• Status Conscious Parents: Mothers are now spendingenormous amounts on clothing for their children, as they believe


that the way a kid is dressed is often a reflection of the parents’sense of style. Higher-cost brands are generally reserved forspecial occasions. This is due to the fact that parents tend todress their children like themselves, and will seek to incorporatebrands that fit with the family’s lifestyle.

A survey by A C Nielsen UTV’s research partner showed thatan average child watches TV for about three hours on week daysand 3.7 hours on weekends, the time spent on television goes upwith age, and the preferred language of viewing is Hindi across allage groups. Apart from the programmes, children also view a lot ofthe advertisements.

Ad expenditure per year on products meant for children andalso bought by them such as chocolates is seven to eight per cent.Pester power is so strong that these days we find children associatedwith seven out of ten commercials. Thus, innovative marketingstrategies try to target children, directly or indirectly. Children playthe protagonist in a host of manufacturing, financial services,automobiles, real estate and consumer durables advertisements thatseek to break the advertisement clutter and make an emotional impact.Multi-brand commercial products manufacturer Ingersoll Rand,financial services company Tata Capital, real estate player HousingDevelopment and Infrastructure Limited and air-conditioner makerVoltas are all using children as story tellers in their advertisements.28

Findings of a Survey on Influence of Advertisements onChildren in India

Mumbai Grahak Panchayat carried out a survey in Mumbai inwhich 1000 children in the five to 15 age group were sampled alongwith 300 parents regarding influence of advertisements on childrenin India. The main findings were.29

• Testimonials by stars, and unstated promises of food marketerson consumption of the advertised food were accepted well bythe kids. The survey revealed that that 33.3 per cent of the childrenfelt that they would become successful or would score bettermarks by consuming the advertised foods, while 23.3 per cent ofthe parents believed the same.

• 36.1 per cent of the parents were not happy about the fact thattheir children demanded the advertised products because their

SHEETAL KAPOOR 27

favorite film star or sports star used the product. Also, 74.9 percent of parents felt that TV ads created ‘unnecessary desires’for the advertised products in the minds of children and 60.8 percent of them cribbed about the fact that their monthly expenditurerose because of children’s demands. 72.2 per cent parents wanteda ban on ads during children’s programmes.

• 70.7 per cent of the parents admitted that they submitted to thedemands of their children.

• The survey indicated that 78.6 per cent of the children felt irritatedthat their favorite programmes were interrupted by ads.

• Advertisers world over target children, not just because they are‘persuaders’ but also because they are tomorrow’s buyers. InIndia however, ads on television advertise junk foodsindiscriminately and this is harmful for children.Need of the hour is that India should have a more effective

regulatory framework for advertising aimed at children.

Battle over Ads for Kids AbroadOn 24th February 2004, an expert panel of the American

Psychological Association said that children under eight years areunable to understand that TV ads are not real and need to be protectedfrom seeing them. In the United States, obesity is a public healthconcern and is a constant feature in the media. America’s populationhas been considered to be one of the most overweight in the world.The ways in which the food and beverage industries advertise inAmerica and market and brand their products can be considered asa key attribute of this worrying epidemic. Of all the brands advertisedin the United States in 2013, McDonald’s was ranked fifth in termsof advertisement spending with a fee of 976 million US dollars, whichwas more than Ford Motors, Walmart and Macy’s. Subway, ownedby Doctor’s Associates Inc. ranked 21st in the Survey with a total adspend of 514 million U.S. dollars in 2013.30

In the US, federal guidelines place limits on the number of adsthat can run during TV programmes aimed at children under 12, andcall for clear shifts between programmes and commercials. Swedendoes not permit any TV ads directed at children younger than 12. Insome Scandinavian countries, no ads are allowed during children’s


programmes, or even five minutes before or after the programmes.And some western countries now have rules preventing certain foodsfrom being advertised on TV during children’s programmes.

A Small Example of Effects of Child ConsumerismCandy and sweets are often put on stands in shops at the eye

level of children. While it would be healthier to have foods, like fruitsand vegetables in those places, the bright colours and packagingused to sell sweets are more likely to attract children’s attention.

The dictum of consumerism and corporate capitalism dictatesthat social good comes through subtle greed and meeting demandsof people. Yet, putting candy at the eye level of children creates ademand that otherwise may not have been there, or not have beenthere in as much intensity. Likewise, highly caffeinated soft drinksthat are being consumed more and more, have negative health effects.

There has been a change in the Indian consumer’s buying habitssince we liberalised our economy. The consumers since then areenjoying better choices, quality products at better prices, etc.

The next unit is devoted to the changing consumer behaviourand how the consumers look for value while purchasing products.

UNIT 3: CHANGING CONSUMERBEHAVIOUR AND EXPECTATIONS

Reforms carried on since1991, have produced remarkable results,making India one of the most exciting prospects among the emergingmarkets. 45 per cent of Indian population is below the age of 19.Born after 1984, this is our post-liberalisation generation. India isone of the fastest growing economies in the world. The annual growthrate of the Indian economy is projected to have increased to 7.4 percent in 2014-15 as compared with 6.9 per cent in the fiscal year2013-14. The IMF has forecasted that the Indian Economy wouldgrow by 7.5 per cent in the fiscal year 2015-16. According to theNiti Aayog estimates, the Indian economy is projected to grow at therate of 9-9.5 per cent during the 12th Five Year Plan period (2012-2017).

With the rise in income, consumption patterns have changed anda new middle class has emerged in India, which is growing at a fastpace. Various studies have forecasted that in the next decade middleclass would be the dominant section of the Indian population.McKinsey & Company in 2007 forecasted that if the Indianeconomy grows at the rate of 7.3 per cent between 2005 and 2025,then by 2025, 583 million Indians will be in the middle class, whichis equivalent to the current population of countries like Australia.In 2007, India was ranked as the twelfth largest consumer marketin the world and by 2025 it is expected to be the fifth largestconsumer market after the United States (US), Japan, China andthe United Kingdom (UK).31

The rapid economic growth of the past 10 years has averaged acomfortable six per cent; population growth has dropped below twoper cent for the first time in 40 years.

With the fast pacing changes Indian consumers are nowbombarded with so many choices that decision-making is becomingdifficult. The factors which have lead to the change in the lifestyleof consumers are:


Changing Characteristics of Indian FamiliesThe break-up of the joint and extended family has played a

significant role in the emergence of the new urban family as acustomer. According to a survey conducted by Business Today in1971, the average urban family in India consisted of 5.46 members,where individuals had little room for bonding. In contrast in 1997,this average came down to only 4.6 members. This reduction in thesize of the family has enabled the members of a family to relatebetter to one another and still enjoy their own space.32

The major reasons responsible for these changes are given below:a. Shift from strictly hierarchical to egalitarian

character of the family: Indian families areexperiencing many changes and are moving from beingstrictly hierarchical to egalitarian in character. Earlier,the age and gender of the family members governed theauthority. Purchase decisions, including the brand chosen,rested with the eldest male member, especially since healone had the financial power. Other members of thefamily rarely had a say in such purchase decisions andcould express their desire only through the properchannel.In today’s scenario, however, all the members, by andlarge, have the right to express their views and eventuallyinfluence the purchase decision through their choices.Financial independence rests with all family members,at least to some extent. The general awareness level ofall the members is also reasonably high.

Fig.1: Depicts the changing characteristics of Indian families

Strictly Loosely Democratic with EgalitatianHierarchical Hierarchical Veto Power

b. The media explosion: With the Indian skies opening upto various television channels, consumers are beingincreasingly exposed to a wide range of productinformation.

c. Increasing peer influence: More and more familiesare now becoming double-income families with the wife

SHEETAL KAPOOR 31

going out to work. While this enhances the purchasingpower of women, it also exposes them to phenomenalpeer pressure, which, in turn, influences their purchasedecision.

Influence of E-commerceWith the sudden rise of e-commerce, most brand and cost

conscious consumers are turning towards portals for buying orcomparing product price with brick – n– mortar stores. With theadvent of e-Commerce portals such as, Flipkart, Amazon, Jabongthe buying behaviour of Indian consumers has changed as thesewebsites meet the shopping requirements of Indian consumers. Someof the facilities offered by the e-Commerce companies in India are:• EMI options• Cash on Delivery• Huge discounts to buy online• Cheaper than brick – and –mortar stores• Increase in usage of internet through smart phones• Social reviews

These companies have been able to reach to rural consumerswho have disposable income, but no stores (Brick – N – Mortar)selling luxury branded products. With e-commerce and smart phoneswith internet consumers are now able to order brands which theywish to wear, without traveling to city to buy those brands.

Consumer RightsToday’s consumers know their rights and are more likely to make

their opinions known if they feel they have been violated. Consumersconcern over health and food standards, human-rights violation andenvironmental abuse has endangered many companies such as Nestle,Coca Cola, Nike, etc. Nestle had to go for a nation-wide productrecall of its Maggi noodles when FSSAI, the food regulator foundthe following:

(a) presence of Lead detected in the product in excess ofthe maximum permissible levels of 2.5 ppm

(b) misleading labelling information on the package reading“No added MSG”


(c) release of a non-standardised food product in the market,viz. “Maggi Oats Masala Noodles with Tastemaker”without risk assessment and grant of product approval.

Earlier when pesticides were reported in soft drinks, then thesale of Coca Cola and Pepsi had suddenly dropped. What is emergingis a ‘pull’ scenario in which the customer is empowered. This isfacilitated by new media where Internet infomediaries offer theconsumer greater choice, and websites have the chance to receiveopinions from customers which can be expressed to a far rangingaudience.

Celebrity InfluenceIn India, celebrities are regularly used as brand ambassadors in

marketing communication by marketers to lend credibility to theirproducts, increase trust factor and promote the brand. Celebrityendorsements work to a great extent for all class of consumers inIndia, as Bollywood and cricket plays a huge role in Indian life-cycle.Recently there has been a huge demand from consumers that thecelebrities should be made accountable if products endorsed by themare found to be unsafe for consumption.

Quality Oriented OutletsIndian consumers are now quality conscious and choose

expensive brands as they feel that price is an indicator of quality.Most durable products in India have long shelf life, and consumersprefer to get them repaired after break down. Most consumers furtherensure that products / brands have a service centre in their nearbyarea for future break down repairs. If a product / brand doesn’thave a service centre, it is difficult to sell to Indian buyers.

FreebiesFreebies are consumer products given free of cost as gifts to

purchases of selected products above a certain value. Indianconsumer’s buying behaviour is influenced by freebies such as buyone get one free, discounts, free trials, samples, coupons, gifts,patronage awards, refund offers, tie-in-promotions. These generallycomprise of offers such as shopping for five thousand rupees andgetting a Rs 500 coupon for next purchase or buying three garmentsat the cost of two, etc.

SHEETAL KAPOOR 33

From Historical Loyalty to Extreme IndividualismLoyalties towards products, brands and even buying systems

are swiftly abandoned for individualized solutions. Moving from ‘We’to ‘I’, this group of consumers prefers to shop alone, knows exactlywhat he/she wants and does not believe in sticking to only the triedand tested brands. The current urban middle and upper class Indianconsumer buying behaviour to a large extent has western influence.The Indian consumer has become much more open-minded andexperimental in his/her perspective towards western trends. Mostinternational brands have presence in India and have gained wideconsumer acceptance.

Increased Focus on Value than MoneyThere has been a subtle but definite shift in the Value-for money

equation. From the earlier pre-occupation with minimizing the moneyoutlay, which often means cheaper goods, the shift is to increasedemand for better value, even if it is at a higher cost. Post India’seconomic liberalization, policies were initiated in 1991 for opening ofmarket, many new product offerings have entered the Indian marketand product variety has also increased manifold. Indian consumershave always preferred foreign goods and with liberalization, theyhave a choice vis-à-vis local products. The sellers’ market is slowlymoving towards becoming the buyers’ market.

Social MediaSocial media is playing an important role in changing buying

behaviour and now people buy to get LIKE. Often, users checkreviews on social media prior to purchase decision, even prefer moviereview from friends rather than film critics. With lowest broadbandconnectivity, most Indians are turning towards smart phones withinternet, often checking new offers and products on mobile app.

Consumer Spending BehaviourThe attitude of Indian consumers has undergone a major

transformation over the last few years. The Indian consumer todaywants to lead a life full of luxury and comfort. Wants to live in presentand does not believe in saving for the future. Consumers now havethe power of information at their fingertips, enabling them to compareand shop wide range of goods and services anytime, anywhere. Lately,


this trend has accelerated, as mobile apps have been playing largertransformative role to consumer fingertips.

From Decision-following to Decision-makingWith individualized and redefined value the consumer has started

questioning every offering. The buying system has consequentlybecome more complicated than ever before. Questioning, analysingand then accepting/rejecting is the new norm as today’s consumersbegin to make their own decisions as opposed to merely followingothers.

For example, a special soap exclusively for babies, even in homeswith low disposable incomes, is increasingly considered a must ongrounds of hygiene and protection for tender, sensitive skin. On theother hand, hair dryers and packaged yogurts are examples of newproduct forms failing to find acceptance with this questioningconsumer.

From Choosing to DemandingMerely being able to choose from options available is no longer

enough. The new evolved consumer demands better quality, improvedtechnology, better design and attributes and quicker service. Thefailure to meet these tough demands is met with experimentation –with foreign brand or ingenious solutions. Marketers are respondingto the challenge by taking the briefs from the consumers.

Fig. 2 Paradigm Shift in Consumer Behaviour

Then NowLoyal IndividualisticMoney ValueDecision follower Decision-makerChoosing Demanding

TechnologyOne of the greatest drivers of change is the range of possibilities

which have opened up because of the increased use of technology.The use of internet has made the consumer more aware about theproducts which are available globally. By a click of a button one cancompare prices of various commodities, he can buy products or

SHEETAL KAPOOR 35

services online. The use of technology has revolutionizedorganisations’ interface with customers.

Consumers today want value for money, a product that wouldmeet reasonable expectations, should be safe in use and full disclosureof the product specification. On one hand the aspirations of theconsumers are increasing but there is a foremost requirement thatthe consumers should act in a responsible way for the survival of notonly humanity but also of the planet they inhabit.

UNIT 4: SELF-HELP THROUGHCONSUMER EDUCATION

Educated and well informed consumers are an asset to anysociety. An aware consumer lays foundation for building up a superiorsociety. Some of the definitions on consumer education are:• Betty Furness describes consumer education as, “The preparation

for the art of everyday living which enables the individualregardless of age or income to make an intelligent choice basedon knowledge and information.”

• Troboft and Boyd described consumer education as, “Learninghow to gain satisfaction by using your personal and environmentalresources to achieve the lifestyle you prefer.”The main aim of consumer education is to enhance the skills of

rational thinking based on logic and adopt a realistic attitude towardsoptimum utilization of resources. It educates the purchaser of whatto buy, where to buy, how to buy and how to make the best use ofwhat he buys in order to get the best value for his money.

In reality consumers are often exploited due to ignorance andlack of unity amongst them. Some indicative examples of exploitationof consumers are:

1. Many times packages are used by manufacturers as acamouflage to deceive consumers, especially as regardsthe quantity of the product contained in the packet. Forexample, a consumer should only pay for the sweetsand not for the box.

2. Under the Packaged Commodities Rules, 2011 of theLegal Metrology Act all packages must carry the retailprice inclusive of all taxes. But many times, this price iseither obliterated or is overwritten by another price whichis legally wrong and the consumer should object if hecomes across such a case.

SHEETAL KAPOOR 37

3. Many manufacturers copy a brand name of some reputedmanufacturer. The brand name may be an exact imitationwith some slight change in spellings or logo. Technicallythis practice is known as product cloning or counterfeitsand is very rampant during festival season.

4. Unless the package is transparent, the buyer cannot judgethe contents by appearance. If quality and ingredientsinformation on the package label is absent, the buyerhas to purchase almost blindly.

5. There is no feasible way to check the weight and volumeof the contents unless the buyer opens the package toascertain the weight. During festivals many of the itemsare being bought for gifting purposes.

These are some examples of how the consumer can be exploitedby the traders unless he takes precautions. Consumer awareness atthe time of purchase and knowledge of the law which givesconsumers power in the market place, help in reducing the lossescaused by ignorance. Some of the approaches to Consumer educationand protection are:

Educating the Consumer about their Rights andResponsibilities

A consumer who is aware about its rights and responsibilitiesand exercises them intelligently at the market place to avoid beingcheated by the traders. This is a pre-purchase preventive option toavoid being exploited by the traders. As discussed in Unit 1 the urbanconsumers on one hand face the problem of plenty and have to learnto become ethical consumers. Moreover, the rural consumers sufferfrom problems such as, adulteration, substandard quality productsand lack of choices.

Some Tips to become Sayani RaniSayani Rani which comes as the spokes girl in the Department

of Consumer Affairs advertisements is a smart consumer whoexercises her rights and is not ready to be cheated by the market.She always thinks rationally while making purchases, is conscious ofher rights and responsibilities and is not swayed by the false anddeceptive claim of the traders. She is aware of her following rights:


• Right to Safety: To be protected against the sale of goods andservices which are spurious/ hazardous to life.

• Right to Information: To know the quality, quantity, weight andthe price of goods/services being paid for, so that one is not cheatedby unfair trade practices.

• Right to Choose: To be assured, wherever possible, access to avariety of goods and services at competitive prices.

• Right to be Heard: To be heard and to be assured that the interestwould receive due consideration at appropriate fora.

• Right to Seek Redressal: To seek legal redressal against unfairor restrictive trade practices or exploitation.

• Right to Consumer Education: To have access to consumer education.Consequently, two very important rights have been added for

developing countries which are:• Right to Basic Needs and• Right to a Healthy and Sustained Environment

Tips for shopping: A smart consumer should be aware of itsresponsibilities as a consumer.• Plan before purchasing any goods. Study the price range and the

quality before making any purchase.• Always prepare your shopping list containing the key items to be

bought in advance. Consumers should be careful about false ormisleading advertisements.

• Packaged water/ mineral water must have the Bureau of IndianStandards Certification mark (ISI).

• Food items should have FSSAI mark in order to ensure safetyand quality. Non-vegetarian, food package shall display red symboland green symbol is used for vegetarian food items.

• Any packaged commodity distributed, offered, distributed for saleneeds conspicuously printed and the label should contain thefollowing

i. complete name and address of the manufacturer, packeror importer

ii. common or generic name of the commodity containedin the package

SHEETAL KAPOOR 39

iii. the month and the year in which the commodity ismanufactured or packed or imported

iv. net quantity in terms of standard unit of weight or measureor number

v. the maximum retail price (inclusive of all taxes)vi. Toll Free number where consumers can lodge complaints

if there is any problem

• The retailers who are found not complying with details as givenby the Legal Metrology Act attract a heavy fine and punishmentupto three years.

• List of ingredients should be declared in descending order ofweight/volume. The amount of the nutrient for which a healthclaim is made has to be declared on the label.

• Where any hydrogenated vegetable fat is used in preparation of anyfood, the declaration that it contains trans fatty acid shall be given.

• Take the receipt of your items and guarantee or warranty cardduly stamped and signed by the seller, and keep them at a safeplace.

• Avoid unscrupulous traders, especially in case of purchase ofperishable items such as, sweets. Always prefer to purchasebranded items and check the expiry date.

• While making a purchase, make efforts to obtain informationabout the product or service before paying for or acceptingservice. Read the terms and conditions before purchase.

• Buy all medicines from a licensed chemist only and insist forcash memo. Check manufacturing license number and distinctivebatch number on the label. Do not purchase or consume anyexpired medicines.

• It is the responsibility of the consumer not to pollute theenvironment while disposing of waste material, during and aftercelebrations.

• Approach Consumer Forum for redressal of consumer grievancesagainst sale of defective goods or deficient services or adoptionof unfair or restrictive trade practices.Moreover a consumer should try to purchase products ethically.


As there has been an increase in the purchasing power of urbanIndians they have started moving towards conspicuous consumption,which is leading towards a lot of waste generation. Urban consumersshould be taught about the benefits of ethical and green consumption.

Ethical consumption stresses the role of the consumer inpreventing labour exploitation, environmental conservation andexercising human rights while buying products. By consumingconsciously and ethically we can realistically create change. Beforebuying anything one should ask: Who makes it? Who needs it? AndWho profits from it?

Ethical consumption is a way to help us feel that we have poweras consumers, that we can vote with our rupees. By using thisconsumer power we can have impact on the larger economy andhelp create a world where the economy benefits all people in moreequal ways. Some suggestions regarding ethical consumption are:• Contacting retailers and manufacturers for more information

about their practices.• Making a point to ask about the people who make the things we

buy.• Considering the environment cost of producing the product.• Thinking about how we would dispose of the product once we

finish with it.• Supporting fair trade.• Reusing things and fixing things that are broken.• Not getting swayed by advertisements.• Investing money ethically.• Boycotting companies that exploit workers and harm the

environment.Radically restructuring the usage of the environment can be

achieved by discipline and selflessness. Instead of throwing somethingaway, one should take time to fix it or take it to a tradesperson to fixit. The cost may be cheaper than buying a new one and we would bereducing waste.

SHEETAL KAPOOR 41

Rural Consumer EducationThe success of any consumer movement depends on the

consciousness and awareness of rural consumers. A number ofawareness programmes should be taken up in local and regionallanguages to teach the rural consumers to avoid them from beingduped by the traders. Some of the initiatives are:• Rural consumers should be made aware of their rights as a

consumer. They should be taught to check quality marks on theproducts they purchase so that they do not fall prey to greedytraders.

• They should be taught to take a receipt after purchase and checkthe expiry date of an item.

• It is required that the individuals, government and consumerorganizations should work hand-in-hand for educating the ruralconsumers, so that their hard earned money is not wasted.

• Marketers also need to look long term because if they supplysubstandard products they would loose the trust of the people.So short term profiteering should be avoided.

• The rural youth are more open to fresh concepts as against theirelderly family members so it is better to build awareness aboutconsumer education at a very young age. For example, consumereducation should be taken up as a subject in school’s curriculum.

• The Central government builds awareness among consumersthrough radio and television. Further focusing on the opinionleaders which play an important role in communicating a messageto the rural consumers.

Initiatives Towards Consumer Education1. Business response: As many big business houses are

increasingly generating profits more than the GDP ofsome smaller nations, it is now being felt that profit-maximisation should not be the sole objective ofcorporates. Many transnational corporations are richerand more powerful than the state that seeks to regulatethem. It is increasingly being felt that corporations havea responsibility towards the society as a whole and therehas been an increased focus on corporate social


responsibility and ethical practices. On 15th March, 2016a Memorandum of Understanding (MOU) has beensigned by the government with industry associationsFICCI, ASSOCHAM, CII, PHD Chamber of Commerceand Industry and Dalit Indian Chamber of Commerceand Industry (DICCI) to undertake joint programmeson implementing a self-regulated code of businesspractice to protect consumer rights against misleadingads and fake items. The MoU would broadly cover thecollaborative programmes on developing andimplementing a self-regulated code of fair businesspractices, establishing a consumer affairs vertical withinthe industry body, initiating advocacy action against unfairtrade practices and preventing fake and sub-standardproducts/services and adoption of voluntary standardsby industry members.

Nowadays, all big companies have a customer care centre foreasy and speedy redressal of complaints. Businessmen should actas trustees of society’s wealth. Fraudulent, unethical and monopolistictrade practices on the part of traders should be avoided by followingthe law diligently. Businessmen should take all measures to providesafe products and services, disclose full information about them inadvertisements.

2. Role of Consumer Organisations: Consumerorganizations are voluntary associations established forthe purpose of safeguarding the interests of theconsumers. These organizations create awareness inconsumers about their rights, help individual consumersto fight with malpractices of traders, do research oncomparative testing and take up the issues of wrongbusiness practices. They have been instrumental in actingas pressure groups and bringing about many legislativechanges. The UN Guidelines on Consumer Protection(UNGCP) in its objectives calls upon governments to‘facilitate development of independent consumergroups’.33 Some of the VCOs which are actively workingin the area of consumer protection are, VOICE(Voluntary Organisation in the Interest of Consumer

SHEETAL KAPOOR 43

Education) in Delhi, CERC (Consumer Education andResearch Centre) in Ahmedabad, Common Cause,Consumer Unity and Trust Society (CUTS) in Jaipur,the Federation of Consumer organizations of Tamil Nadu,(FEDCOT), Akhil Bhartiya Grahak Panchayat, Pune,the Mumbai Grahak Panchayat, Mumbai, ConsumerGuidance Society of India, Mumbai, Federation ofCosumer Organisations of West Bengal Federation ofConsumer Organisations of Orissa.

3. Mass Media: The media is increasingly sensitive toconsumer needs. Print, radio, television and internet offerinformation, advice and advocacy based programmes.In the print media almost every daily newspaper as wellas journals and magazines run regular columns in supportof consumers.

4. Government Response: The government by now hasenacted 24 pro-consumer Acts to control buyer-sellerrelations at the market place. The major consumerprotection legislations in India are:

– The Indian Penal Code, 1860– The Indian Contract Act, 1872– The Sale of Goods Act, 1930– The Agricultural Produce (Grading and Marking) Act,

1937– Drugs and Cosmetics Act 1940– The Drug (Control) Act, 1950– The Emblems and Names (Prevention of Improper Use)

Act, 1952.– The Forward Contracts (Regulation) Act, 1952– The Industries (Development and Regulation) Act, 1954– The Essential Commodities Act, 1955– The Trade Marks Act, 1999– The Prevention of Black Marketing and Maintenance

of Supplies of Essential Commodities Act, 1980– The Bureau of Indian Standards Act, 1986– The Consumer Protection Act, 1986– The Competition Act, 2002– Cigarettes and Other Tobacco Products (Prohibition of


Advertisement and Regulation of Trade and Commerce,Production, Supply and Distribution) Act, 2003

– Right to Information Act 2005– The Food Safety and Standards Act, 2006– The Legal Metrology Act, 2009

Certain government departments such as telecommunications,water, and electricity organize Lok Adalats from time to time so thatthe grievances of consumers relating to their departments can behandled. This is a practical method to handle consumer grievancesand seek a solution. Six categories of public utility services are includedin the jurisdiction of permanent Lok Adalats under Section 22 A inthe Clause B of the notification of permanent Lok Adalats. They aretransport service for the carriage of passenger or goods by air, roador water, postal, telegraph or telephone service, supply of power,light or water to the public or any establishment, system of publicconservancy or sanitation, service in hospital or dispensary andinsurance sector.

Some departments such as, railways have made their servicesefficient and guide the consumers through their customer care number139 and toll free number 1800-111-139. In three service sectors viz.banking, insurance and electricity Ombudsmen have been createdfor free and fast redressal of consumer complaints. The BankingOmbudsman addresses 27 grounds of complaints regarding deficiencyin banking services. 85,131 complaints were received by BankingOmbudsman in the Year 2014-15 which were 11 per cent higherthan previous year.

National Consumer Day-Genesis: 24th December is alandmark day in the history of consumer movement in India as onthis day the Consumer Protection Act, 1986 came into existence.The Consumer Protection Act, 1986 was enacted by the Parliamentto protect the interests of consumers against substandard products,increased prices through market manipulation, failed warranties, poorafter sales service and unfair trade practices. Thus, 24th Decemberis observed as National Consumer Day in India. Thus, ConsumerProtection Act (CPA) is considered as a benevolent social legislaturefor protecting consumers from the malpractices of the manufacturers.CPA provides simple, speedy and inexpensive redressal to thegrievances of the consumers. This Act is not only preventive but

SHEETAL KAPOOR 45

also compensatory in nature. Unlike other laws, it is civil and focuseson undoing the wrong to a consumer by way of remedial action orpayment of compensation or damages to the aggrieved consumer.The Act has set in motion a revolution in the field of consumer rightsthat perhaps cannot be paralleled anywhere else in the World. TheAct applies to all goods and services unless especially exempted bythe Central Government, in all sectors whether Private, Public orCo-operative.

In order to meet the changing requirements of consumers in theemerging marketing environment the Act has been amended a numberof times with the last amendment in 2002, providing more teeth tothe law and to cut down delays in disposal of cases by the ConsumerFora at various levels. The new Consumer Protection Bill is pendingin the Parliament which would widen the horizon and deal with theproblems related to online purchases, product recalls also.

Concluding RemarksThe strategy of “caveat emptor” i.e. the buyer needs to be beware

of products has now shifted to “caveat venditor” i.e. the vendor orthe marketer needs to be aware of the needs of the consumer. Themarketer can only survive unless the consumer purchases hisproducts. Ethical consumption has become a reality for consumers,as well as businesses around the world. Every single purchasedecision has an affect on the environment, consumer health and theworkers who manufacture the products. Companies have tounderstand that the key to building long lasting relationship withconsumers is the creation of superior customer value and satisfaction.Thus, what is required is a vibrant consumer movement, that is muchcloser to the people and is pro-poor, pro-women and pro-rural. AsMahatma Gandhi remarked “There’s enough on this planet foreveryone’s needs but not for everyone’s greed.”

References1. Porter, M.E., The Competitive Advantage of Nations (New York, Free

Press, 1990)2. (1994) 4 SCC 225, AIR 1994 SCW 28013. (1995) III CPJ 2964. (1993) CPJ 302 (NC)


5. Mohd. Suleman Ansari V. Shankar Bhardari, 2006 CTJ 105 (SupremeCourt)

6. Indian Medical Association v. V. P. Shanta (1995) 6 SCC651; AIR1996SC 550

7. Laxmi Engineering Works v. Industrial Institute II (1995) CPJ 1 SC1995

8. http://www.ibef.org/industry/indian-consumer-market.aspx9. Information from Census of India, 201110. http://articles.economictimes.indiatimes.com/2013-10-06/news/

42745678_1_credit-cards-debit-card-payments11. http://www.cccindia.co/corecentre/Database/Docs/DocFiles/

INDIAN_CONSUMER_MARKET.pdf12. Kapoor Sheetal, “Festival Spending”, Consumer Voice, November-

December, 2005.13. http://www.mapsofindia.com/my-india/india/growing-mall-culture-in-

india-changing-lifestyles(7-9-2014)14. http://www.thehindubusinessline.com/economy/shopping-malls-to-

grow-in-size-numbers-in-2014-report/article5583116.ece15. Kapoor Sheetal, “Growing Consumrism in Rural India”, Consumer Voice,

July-August, 2005.16. Kotler Philip and Prafulla Agnihotri et al., Principles of Marketing: A

South Asian Perspective (Pearson 2011), Appendix 317. Kirk Patrick, Sales Management (Prentice Hall, New York, 1994).18. Chitwood Roy, World Class Selling (Jaico Publishing House, 2005)19. Leon Festinger, A Theory of Cognitive Dissonance (Stanford, CA:

Stanford University Press, 1957)20. Stanton, Etzel and Walker, Fundamentals of Marketing, 10th ed.

(McGraw-Hill, Inc., 1994).21. Still, Cundiff and Govoni, Sales Management: Decisions Strategies

and Cases 5th ed. (Prentice-Hall of India, New Delhi, 1991).22. Ingrid C. Kildegaard, “A Household is Not a Family”, Journal of

Advertising Research, Vol. 7 (June 1967), pp. 44-46.23. Peter J Paul and Olson C Jerry, Consumer Behaviour: Marketing

Strategy Perspectives (Richard D. Irwin, Homewood, Ill., 1987), p. 447.24. Battle Over Advertisements for Kids Hotting Up in US, UK”, Hindustan

Times, February 29, 2004, p. 15.25. Rodrigues, Malika, “Kids Play”, The Economic Times: ‘Brand Equity’,

August 23-29, 2000, p.3.26. Solomon M. C., Consumer Behaviour, Prentice-Hall of India, New Jersy,

1999).27. http://retail.franchiseindia.com/article/sector-watch/luxury/Kidding-

becomes-a-serious-business.a1741/.

SHEETAL KAPOOR 47

28. http://articles.economictimes.indiatimes.com/2011-10-05/news/30246900_1_clutter-advertisements-mccann-worldgroup.

29. https://nitawriter.wordpress.com/2006/10/26/children-demand-advertised-products/.

30. http://www.statista.com/topics/2223/food-advertising/.31. http://www.mckinsey.com/global-themes/asia-pacific/the-bird-of-gold.32. Shailesh Dobhal, “Selling to the New Urban Family”, Business Today,

February 22, 1999, pp. 66-81.33. UNGCP, UN Assembly Resolution No 39/248 dated 9-4-85 on Objectives

and General Principles.

INDIAN INSTITUTE OF PUBLIC ADMINISTRATION

The Indian Institute of Public Administration, established as an autonomous body under the Registration of Societies Act, was inaugurated on March 29, 1954 by Shri

of establishing this Institute was to undertake such academic activities as would

CENTRE FOR CONSUMER STUDIES

with other stakeholders by serving as a bridging “think tank” with an intensive

Centre for Consumer Studies

Room No.85Indian Institute of Public Administration

I.P. Estate, Ring RoadNew Delhi—110002

Tel: 011-23468347, 23705928 (Fax)Email: [email protected]

Website: www.consumereducation.in

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