CONSUMER ATTITUDES TOWARD THE PREVENTION AND RESOLUTION OF CONSUMER COMPLAINTS Dissertation for the Degree of Ph. D. MICHIGAN STATE UNIVERSITY MARILYN POGUE NAGY 1976 NAICIHO " ._. Late University This is to certify that the thesis entitled CONSUMER ATTITUDES TOWARD THE PREVENTION AND RESOLUTION OF CONSUMER COMPLAINTS presented by Marilyn Pogue Nagy has been accepted towards fulfillment of the requirements for Ph.D. Family Ecology degree in Liar/J/Z‘c/éh Major professor Date October 19, 1976 0-7639 ABSTRACT CONSUMER ATTITUDES TOWARD THE PREVENTION AND RESOLUTION OF CONSUMER COMPLAINTS By Marilyn Pogue Nagy This research attempted to assess consumer attitudes toward the prevention and resolution of selected consumer problems and issues. There were two parts to the study. The first contained Likert-type statements related to government intervention, business responsibility, and consumer education as measures for preventing consumer complaints. The second part listed common consumer problems and pro- posed solUtions that involved government intervention, voluntary business responsibility, and consumer education solutions. Respon- dents indicated their agreement or disagreement with each solution on a five-point Likert scale. In addition, there were questions included in the survey to provide exploratory data on contemporary consumer issues such as price marking in supermarkets using computer check-outs, television advertising aimed at children, special market- place protection for the senior citizen, and paying for pollution caused by consumer products. Questions on age, sex, occupation, income, education, and employment status were included so responses could be cross-tabulated Marilyn Pogue Nagy by demographic categories. These questions also facilitated a comparison of sample characteristics to population characteristics. The survey was mailed to randomly selected names in five InetrOpolitan areas: Denver, Colorado; Atlanta, Georgia; Detroit, Michigan; Kansas City, Missouri; and Seattle, Washington. The cities represented diverse industries, occupations, unemployment rates, incomes, and educational levels. The names were generated from computer runs of the R. L. Polk Co. occupational mailing lists. The survey instrument was mailed to 735 consumers during July and August, l976. There were 224 surveys returned, 223 of which were usable. After deducting for questionnaires that were returned for non-delivery, the return rate was 33%. The respondents repre- sented a cross-section of the population in terms of income, age, occupation, sex, and education. Chi-square analysis was used, since ordinal data were involved, to infer if any of the demographic variables were statistically asso- ciated with the consumer attitudes expressed in the survey. Twenty-one hypotheses were tested to determine if consumers in various demographic categories held different attitudes toward government intervention, voluntary business responsibility, and education as measures to prevent and resolve selected consumer com- plaints. There were significant differences in attitudes, by sex, with women holding more positive attitudes toward voluntary business responsibility, government intervention, and consumer education as preventive measures. Marilyn Pogue Nagy There were significant differences, by occupation, in atti- tudes toward government intervention to both prevent and resolve complaints with those in the less skilled occupations holding more favorable attitudes toward government intervention. There were significant differences, by educational level, in attitudes toward government intervention and education as measures for preventing consumer problems. The majority supported the concepts of consumer education courses for adults and high school students and having a local consumer specialist available whom residents could contact for information. They also supported the government's role as a provider of consumer information. The majority of the respondents felt business should produce better quality products which require less service, even if they cost more; perform all in-warranty work without a labor charge; replace defective in-warranty products that cannot be fixed within 30 days; provide more informative advertising; and be concerned about having satisfied customers and voluntarily correct consumer problems. There was some skepticism expressed, but the majority supported the concept of business groups setting up arbitration panels with impar- tial participants to decide on the merits of disputed complaints. Respondents supported more legislation at the federal level so those who are fraudulent cannot move to another state to avoid prosecution. They also supported legislation requiring that con- sumer contracts be written in language easy for average consumers to understand and extending the 3-day cooling-off period to all sales contracts over $35. CONSUMER ATTITUDES TOWARD THE PREVENTION AND RESOLUTION OF CONSUMER COMPLAINTS By Marilyn Pogue Nagy A DISSERTATION Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY College of Human Ecology 1976 © Copyright by MARILYN POGUE NAGY 1976 ACKNOWLEDGMENTS No major endeavor is possible without the c00peration of others. The writer wishes to acknowledge the contributions of those who helped make the doctoral program, including this research, pos- sible. I would like to sincerely thank all the members of my graduate committee: Dr. Eileen Earhart, Dr. Jane Oyer, Dr. Donald Taylor, and Dr. Linda Nelson. Particular gratitude is due Dr. Linda Nelson, who assumed the chairmanship of the committee following the sudden death of Dr. Carol Shaffer. The research took on a realism not otherwise possible because of the contributions of the following peOple: Mr. Robert Holding of the Association of Home Appliance Manufacturers, Mr. E. Sly of-the S. S. Kresge Company, Mr. J. H. Hagman of the Ford Motor Company, and Ms. Katherine Manley of the Better Business Bureau of Metropolitan Detroit. The cooperation of friends, particularly Wilma Brown and Ann Beuerle, needs special recognition as does the support and encouragement of my husband, Ernest, and parents, Lillian and Albert Pogue. ii I TABLE OF CONTENTS Page LIST OF TABLES . . . . . . . . . . . . . . . . . . . . . . . . vi Chapter I. INTRODUCTION ..................... l The Problem ..................... 1 Alternate Solutions to Consumer Problems ..... 2 The Human Ecological Approach to Consumer Problems. 5 Purpose of the Study ................ 7 Value of the Study ................. 7 Limitations of the Study .............. 8 II. REVIEW OF LITERATURE ................. 10 Overview of Consumerism ............... 10 Historical Perspective on Consumerism ....... ll Consumerism Issues .......... . ..... 13 Government Intervention Literature ......... 16 Government's Role in Consumer Protection ..... l6 Types of Government Intervention ......... 21 Success and Failure of Government Intervention . . 24 Business Responsibility Literature ......... 27 The Marketing Concept ............... 27 Positive Consumerism Attitudes by BusinesSmen . . . 28 Negative Consumerism Attitudes by Businessmen . . . 30 The Changing Warranty and Liability Scene ..... 32 Arbitration as a Solution ............. 34 Product Testing .................. 35 Better Communication ............... 36 Consumer Education Literature . . . . ........ 36 Definition of Consumer Education ......... 36 Positive and Negative Attitudes Toward Consumer Education .................... 37 Is There a Need for Consumer Education? ....... 39 The Present Status of Consumer Education ..... 42 Business and Consumer Education .......... 44 Research ...................... 45 The Barksdale and Darden Study .......... 45 The Hustad and Pessemier Study .......... 47 Greyser and Reece Study . . . ........... 48 Swan and Longman Study .............. 49 iii Chapter Opatow Study ................... Gazda Study .................... Greyser and Diamond Study ............. LaBarbara Study .................. Dornoff and Tankersley Study ........... Thomas Study ................... Summary ...................... III. RESEARCH DESIGN AND METHODOLOGY ............ Research Methodology ................ Survey ............ . ......... Measuring Attitudes ................ Sample ....................... The Questionnaire .................. Pre-test ..................... Hypotheses ..................... Group l ...................... Group 2 ...................... Group 3 ...................... Group 4 ...................... Methods of Analysis ................. IV. ANALYSIS OF THE FINDINGS ............... Attitudes Toward Government Intervention to Prevent Consumer Problems ............. Group I Hypotheses Testing ............ Discussion of Specific Government Intervention Measures to Prevent Consumer Problems ...... Attitudes Toward Voluntary Business Responsibility to Prevent Consumer Problems .......... Group 2 Hypotheses Testing ............ Discussion of Specific Voluntary Business Actions to Prevent Consumer Problems .......... Attitudes Toward Consumer Education to Prevent Consumer Problems ................. Group 3 Hypotheses Testing ............ Discussion of Specific Consumer Education Alternatives ................. Attitudes Toward the Resolution of Common Consumer Complaints ................... Group 4 Hypotheses Testing ............ Summary of Responses to Problem Situations . . Other Findings ................... Attitudes Toward Special Protection in the Marketplace for Senior Citizens ......... iv Chapter Page Attitudes Toward Advertising Aimed Directly at Children ................... lOB Attitudes Toward Price Marking in Supermarkets With Computer Checkouts ............. lO9 V. 'SUMMARY, CONCLUSIONS, AND IMPLICATIONS ........ llZ Methods and Objectives ............... ll2 Swmmy. ... . .................. H4 Hypotheses .................... ll4 Other Findings .................. llS Conclusions and Implications ............ ll7 Recommendations ................... 120 Recommendations to the Business Community ..... 120 Recommendations to the Education Community . . . . 120 Public Policy Recommendations ........... l21 Recommendations for Future Research ..... . . . . lZl APPENDICES .......................... 124 A. QUESTIONNAIRE ..................... l25 B. COMPUTER PRINT-OUT .................. 134 REFERENCE LIST ........................ I38 Table 2.l 2.2 2.3 3.1 3.2 3.3 3.4 3.5 4.1 4.2 4.3 4.4 4.5 4.6 4.7 LIST OF TABLES Factors Contributing to the Rise of Consumerism in the 1960's ...................... A Paradigm for Remedial Alternatives for Consumer Protection . . . . . . ................ Consumer Affairs Problems Ranked as Critical or Highly Important by Industry Type .......... Income Characteristics of the Sample and the Population ...................... Occupational Classifications of the Sample and the Population ...................... Percent Distribution by Age for Those in Papulation Over 20 and Those in Sample ............. Marital Status of Sample and Population ........ Educational Classifications of the Sample and the P0pulation ........ . ............. Computed Variable A: Attitudes Toward Government Intervention to Prevent Consumer Problems ...... Attitudes, by Sex, Toward Government Intervention to Prevent Consumer Problems .............. Attitudes, by Education, Toward Government Interven- tion to Prevent Consumer Problems .......... Attitudes, by Income, Toward Government Intervention to Prevent Consumer Problems ............. Attitudes, by Occupation, Toward Government Intervention to Prevent Consumer Problems ...... Computed Variable B: Attitudes Toward Voluntary Business Responsibility to Prevent Consumer Problems . Attitudes, by Sex, Toward Voluntary Business Responsibility to Prevent Consumer Problems ..... vi Page l4 2] 28 58 58 60 60 BI 74 75 76 77 78 81 80 Table 4.8 4.9 Computed Variable C: Attitudes Toward Consumer Education to Prevent Consumer Problems ........ Attitudes, by Sex, Toward Consumer Education to Prevent Consumer Problems ..... . . . ...... Attitudes, by Education, Toward Consumer Education to Prevent Consumer Problems ............. Attitudes, by Income, Toward Consumer Education to Prevent Consumer Problems .............. Attitudes, by Income, Toward Government Solutions to Consumer Problems . . . . .............. Attitudes, by Occupations, Toward Government Solutions to Consumer Problems ..... . ........... Attitudes, by Education, Toward Education Solutions to Consumer Problems ................. Responses to Problem Situation A: The Consumer Purchased a New Car. It Has Had Frequent Service and the Car Still Does Not Operate Right. The Warranty Has Run Out and the Main Problem Has Still Not Been Fixed ................. Responses to Problem Situation B: A New Portable Appliance Does Not Work After One Week's Use. The Local Service Agency Does Not Have Repair Parts and Does Not Know When They Will Be Available. They Have Had the Unit a Month and Are Unable to Fix It. . . . . ReSponses to Problem Situation C: A Consumer Goods Manufacturer Has Been Polluting the Water and Air. To Eliminate the Pollution Expensive Equipment Will Have to Be Installed. How Should These Costs Be Covered? ....................... Attitudes, by Education, Toward Statement: Consumers Should Be Educated That Part of the Increased Cost of Products is Due to Costs of Required Anti- Pollution Equipment ................. vii Page 85 86 86 87 9O 91 92 94 95 96 97 Table 4.l9 4.20 4.21 4.22 4.23 4.24 4.25 Responses to Problem Situation D: The Consumer Purchased a Refrigerator/Freezer Combination Unit. On a Friday Evening Two Months After Purchase, the Unit Stopped Operating. Service Could Not be Reached Until Monday Morning. They Could Not Send a Repair- man Out Until Wednesday. The Consumer Lost $250 Worth of Food From the Freezer. The Freezer Was Fixed Without Charge Since the Unit Was in Warranty Responses to Problem Situation E: This Situation is the Same as Situation D Except That the Refrigerator/ Freezer Combination Is Now Six Years Old and Out of Warranty. The Consumer, Therefore, Had to Pay for Fixing the Unit. What About the Food That Was Lost? . Responses to Problem Situation F: The Consumer Purchased a Coat of a New Material. Two Cleaners Refused to Take the Garment Even Though It Was Labeled "Dry Clean." A Third Cleaner Did Take It. The Garment Was Ruined in the Cleaning Process . . . . Responses to Problem Situation G: The Consumer Has Signed a Contract to Have a Specific Home Improvement Done. The Contractor Has Promised Orally He Would Start Remodelling the Bathroom Within Two Weeks and Be Done in a Month. Two Months Have Gone by and Nothing Has Happened Except the Deposit Check Has Been Cashed ...................... Responses to Problem Situation H: A Couch Was Custom Ordered in January With Delivery Promised in 6-8 Weeks by the Salesperson. It is June and the Couch Has Still Not Been Delivered ............... Responses to Problem Situation I: Salesman Told Used Car Purchaser That the Engine Had Recently Been Re-built. Two Weeks After the Purchase the Car Engine Needed Extensive Repairs ............ Responses to Statement: Senior Citizens Need Special Protection in the Marketplace ........ Responses to Statementz- Advertising That is Aimed Directly at Children Should Be Subject to a Review Board ........................ viii Page - 99 100 102 103 105 106 108 109 Table I Page 4.27 Responses to Statement: Supermarkets Who Have the New Computer Checkouts Should Not Have to Mark Prices on Individual Items by Age, Income, Education, Sex, and Occupation ............ llO 4.28 Responses to Statement: Supermarkets Who Have the New Computer Checkouts Should Not Have to Mark Prices on Individual Items .............. lll ix CHAPTER I INTRODUCTION Adam Smith's invisible hand concept stated that if indi- viduals pursued their own self-interest they would meed the needs of society. Something went wrong! In T975 the Better Business Bureaus nationally received 846,l00 requests for help with consumer complaints (Council of Better Business Bureaus, T975). The Major Appliance (bnsumer Action Panel (MACAP) received 4,000 complaints for arbitra- tion (MACAP, T976). These 4,000 complainants had already been through the retailer-manufacturer channels to try to resolve the issues. These figures do not reflect the requests for help that were received by local and state consumer affairs departments, consumer affairs divisions of state attorney general offices, nor consumer action departments of electronic or print media. The Problem If all consumer problems were clear-cut legal issues, there would be no need for this study. As the marketplace has become increasingly impersonal it has become more difficult to place responsibility for the resolution of consumer problems. Each per- son involved passes the responsibility to someone else, with the end result of no action for the consumer with the problem. While some businesses generate few consumer problems, others which are also operating within the existing legal framework, generate many complaints . There is no consensus as to how consumer complaints should be resolved, only opinions by individual spokesmen. Business has not usually asked consumers what they feel would be fair solutions to consumer problems and issues. Consumerists are frequently criti- cized for not representing the views of actual consumers. This study provides data on how consumers feel about the prevention and resolution of selected consumer problems. It explores consumers' opinions on questions such as how much govern- ment intervention do consumers want? How much responsibility do consumers feel they themselves should have in preventing or accept- ing someproblem areas? What are fair solutions to problems where there are indirect costs to the consumer because of defective products? How responsible do consumers want business to become? Alternate Solutions to Consumer Problems I There are three alternatives to the prevention and resolu- tion of consumer problems discussed in the literature: voluntary action by business, government intervention, and education of the consumer. Some problems can be prevented by voluntary business actions to improve product design, quality control, and servicing policies. Other problems, particularly where it is difficult to pinpoint responsibility or where there are no uniform standards, require government intervention. Still other problems could be prevented if consumers were educated in basic financial planning principles, the decision-making process, how to locate pre-purchase information, and in understanding basic contractual language. There is no unanimity on solutions to consumer problems. As Cox, Fellmeth, and Schutz (1969) point out, the viewpoints of housewives, labor, business, and government on a particular issue are often very divergent. Our secial system is so constructed that changes in one sys- tem effect changes in interfacing systems. Thus, any proposed solu- tions need to be evaluated considering the impact on all other sys- tems, including the family. If a legislative answer to a problem is troposed, the economic impact of both passage and maintaining the status quo must be determined. Secondary effects must also be cal- culated as they often mitigate the effectiveness of the original legislation (Walker, Sauter, & Ford, 1974). If an educational answer to a problem is proposed, questions nqut also be asked and answered. Can those most in need of help be reached? Is education the best answer? What does cost/benefit analysis reveal? Will education solve the problem? When is the iippropriate time and place for consumer information to be available? IDoes education merely mean acceptance of the status quo? If an increased business responsibility solution or arbi- tration is proposed, other questions will have to be asked. Will the unethical merchant who causes the most problems cooperate? If "S3t5 how viable is the solution? What will better quality products t:Ost? Is arbitration feasible? What does it cost? Should arbitration be binding? Can guidelines for deciding on settlements that are fair to all parties be established? Who should serve as arbitrators? No one alternative is feasible in preventing or resolving all consumer issues. Some problems, such as warranty-related issues, need a tripartite approach--increased voluntary business responsi- bility, government intervention, and consumer education. Other problems, such as high-pressure home sales techniques, needed only government intervention, in the form of legislation requiring a 3-day cooling-off period, to reduce substantially the number of com- plaints (Council of Better Business Bureaus, 1976). Most legisla- tion, however, needs enforcement and educative components to be effective. Each of these three alternatives is discussed in the review of literature. The thrust of the next decade may well be the prevention of consumer problems according to Cohen, who states that attempts to eliminate an abuse prior to its introduction represent a social goal that is generally accepted (1975, p. 24). She points out, however, that limitations on the activities of businessmen inherent in the pursuit of prevention are often viewed as restrictive and that a policy of prevention should not unfairly encroach on either the buyer's right to choose or the seller's right to decide what and how to sell. Since consumer protection is conCerned with the fundamental nature of the seller-consumer relationship, it strikes at the very heart of the economic base of our society (Feldman, 1976, p. 4). Consequently, those in government, in business, and consumers all Imve a large stake in the future of consumer issues, problems, and their resolution. The Human Ecological Approach to Consumer Problems This study was undertaken from the perSpective of the human ecologist, whose central focus is the family. The human ecological perspective is not a micro approach; rather it is a macro view which considers the interdependence of the family with the other mxfietal systems with which it interfaces--the economic, political, religious, and educational systems. The human ecologist believes families can best be helped by an interdisciplinary approach to problem solving. The vast majority of families live on incomes where it is not possible to have everything they want (Saxton, 1972, p. 302). Thus a decision to purchase one product or service usually pre- cludes the purchase of another product or service. In a review of recent studies on quarrels by married couples, Saxton found that economic factors were closely related to marital stability and critical to marital adjustment. Further, he states that economic stress is a major cause of marital failure with couples quarreling about the allocation of present spending and how to pay the bills for the things they have already purchased (Saxton, 1972, p. 299). Family economists are also concerned with psychic income, which is defined as the satisfactions and dissatisfactions realized from the use of real income over a period of time (Fitzsimmons & Williams, 1973, p. 251). Throughout the history of human ecology/home economics, education and research programs have focused upon man's well-being, with special emphasis on the family (The Association of Administra- tors of Home Economics, 1970, p. 2). In recent years the profes- sion has become increasingly concerned with the impact of other sys- tens of society on family well-being, realizing that if professionals are to help families they must work for changes in the systems caus- ing problems for families. In the National Goals and Guidelines for Research in Home Economics, developed by the Association of Administrators of Home Economics (1970), seven broad research problem areas were identified to help improve consumer competence and family resource use (Goal IV). Consumer Service Needs Consumer Choice Making and Behavior Consumer and the Marketing System Values and Behavior Management and Decision-Making Processes and Situations Resource Development, Allocation, and Use Levels of Living Nam-hWN-fl o o o o o o 0 Under Goal IV, No. 3, Consumer and the Marketing System, Specific areas where research was needed were identified (p. 45). This study contributes to specific areas under Goal IV, No. 3. 1. Knowledge about consumers useful for increasing consumer satisfaction through improved goods and services. 2. Specific characteristics of consumer preference and its influence on the market. 31,43: vii ' “Vin 7"Il.ffi1 '\ not b) 1:" in .. 2:: re covl‘ . mu; ' DI.‘ o a ' t‘..‘ D g" I I) (n 1-1 In addition, this study contributes to the economic framework for studying the family as described by Rice (1966, chap. 10) and Compton and Hall (1972, pp. 36-37). Purpose of the Study The purpose of this study was to determine the attitudes of respondents in various demographic classifications toward govern- ment intervention, business responsibility, and consumer education as measures to prevent and resolve consumer problems. In addition to hypotheses testing, the study provides des- criptive data on the current consumer issues of advertising aimed at children, pricing of merchandise in supermarkets using computer scanners, and special marketplace consideration for senior citizens. Another goal was to bridge the gap between research and practice. Fox stated, At some point in the near future there will be greater com- munication between researchers and practitioners so that some middle ground is achieved in which the researchers pay somewhat greater attention to practical significance and the practitioner to statistical significance (1969, p. 265). This study is designed to fit that gap. The writer's experience in consumer affairs in industry, government, and education points up that only with a multi-faceted approach, which is pragmatic in nature, is there hope of preventing and resolving consumer complaints. Value of the Study This study can provide seme guidelines to businessmen, (nonsumerists, educators, and government officials as they proceed var "10‘ 5' all: '9 0' Ii 5 5". II. “I I” ‘I - up I 1“ Ii 1 I 0‘ I g . fl '1- " 1.. ‘ a a. " ' to work toward developing mechanisms that will reduce the number of consumer complaints. Businessmen can use the findings to see how their views compare with consumers' views toward voluntary business responsi- bility to prevent and resolve complaints. The results could serve as an aid in developing marketing and service policy strategies that will be less frustrating to consumers. Legislators and government rule promulgators can use the data to see how much responsibility consumers feel government should assume in the prevention and reso- lution of consumer complaints. Those in the academic community who work in the consumer education area can use the data to help identify areas where con- sumer education may be effective in preventing problems. Consumers also benefit by having collective data available to legislators and businessmen as to how they stand on alternate solutions to current nnrketplace consumer problems. Such data provide information to compare the views of consumers with those opinions expressed by consumer spokesmen. Several statements included in the instrument developed for this survey replicate the work of others. Some of the statements and all of the complaint situations are not found in other research; thus they can provide a data base for future research. Limitations of the Study Like all research, particularly that done on limited funds, there are limitations. First, since a mail survey was used, it is possible that the sample returns do not reflect the population, as “cf: I ‘1. - alu:f‘ .o y. I A .‘ OnA ‘l- . - a .1... .l’ n In t. n " \ 1» d- ..lr |_, there is no way to ascertain how the attitudes Of those who respond compare to those who do not respond. Demographic characteristics of the sample show only minor discrepancies with the population when compared with United States Census data (see p. 59). A second limitation is that the data were collected during the summer of an election year in which anti-government rhetoric had become an issue. This may have affected attitudes toward government intervention in consumer-related issues among some segments of the sample. A third limitation is that this study concentrated on consumers' attitudes toward alternate approaches to the prevention and resolution of consumer complaints, which are facets of the broader consumerism movement. No effort was made to assess the attitudes of businessmen toward the situations or statements. The issue of product safety was not dealt with because a review of the literature revealed this was not a consumer concern in regard to complaints. A fourth limitation is a result of the necessity of limiting the sample to five metropolitan areas. Replication of this study should include both rural, urban, and small town respondents in more states. This study used only urban respondents; thus those in out- lying suburban areas, small towns, and rural areas were not repre- sented. CHAPTER II REVIEW OF LITERATURE This chapter includes a review of some of the literature on aspects of consumerism most pertinent to this study, with emphasis on preventing and resolving consumer complaints. Since the amount of literature written in recent years has been extensive, articles and research studies have been selectively included in this review of the literature and research. The review of literature chapter contains five sections. The first section includes an overview of consumerism. The second section includes the government's historical role in consumer pro- tection and discusses types of government intervention. The third section deals with business viewpoints on consumer problems. The fourth section covers perspectives on consumer education as a way of alleviating consumer problems. The fifth section summarizes some of the research relevant to voluntary business responsibility, government intervention, and consumer education as they relate to consumer complaints. Overview of Consumerism Consumerism has been defined in several ways. It is defined Til the dictionary as "the movement seeking to protect the rights of cIonsumers by requiring such practices as honest packaging, labeling 10 11 and advertising, fair pricing and safety standards" (American Heri- tage, 1973, p. 286). Some, such as Feldman (1976), seeit as synony- mous with the term consumer protection. Aaker and Day state that the most common understanding of consumerism is in reference to the widening range of activities of government, business, and independent organizations that are designed to protect individuals from practices that infringe upon their rights as consumers (1971). They further define consumerism as pro- tection against clear-cut abuses, provisions for adequate information, and protection of consumers against themselves and other consumers. Buskirk and Roth (1970) define consumerism as "the organized efforts of consumers seeking redress, restitution, and remedy for dissatisfaction they have accumulated in the acquisition of their standard of living" (p. 62). Historical Perspective on Consumerism Although consumer protection has emerged as an issue three times in the twentieth century, the emphasis has been different (Kangum, 1975, p. 3). The first era was prompted by Sinclair's book, The Jungle (1906), which dealt with slaughterhouse conditions and prompted the passage of the Meat Inspection Act of 1906. Revela- tions about the drug industry prompted the first government inter- vention into food and drug products, also in 1906. The second era of consumerism occurred in the 1930's. It was prompted by inflation, unemployment, and general dissatisfaction with the economy. The third era of consumerism started in the 1960's and was aided by authors who raised the public conscience .dOAf‘h 7" HIV 01” PI ' . .1- d .. “A '- .43: u .Iu Id I ’15-, n \ I I‘ll!- " us. ‘:'-A. 1... ""\. 2" ‘r. h a u i.' a ' 0|) 12 on issues that affect the individual. General Motors' less than exemplary behavior in reaction to Nader's book, Unsafe at Any_Speed (1965), made for more publicity and helped establish Nader as a protector of the consumer against big business (Sethi, 1974). Although much of motivation research was later discredited, many believed in the subliminal effect advertising might have and saw themselves as being manipulated (Dichter, 1960). The third consumerism era was the first in which consumers effectively began to organize at the local and state level. It is this organization that appears to have had a major impact on Con- gress, for until 1959 there were only 10 legislative acts whose prime purpose was to protect consumers, yet in the 1960's 13 acts were passed (Feldman, 1976, pp. 283-285). Despite predictions that today's consumer movement would subside as its predecessors had subsided, consumerism continues to grow in both scope and support according to Kangum, Cox, Higginbotham, and Burton (1975). They point out that the current movement is becoming increasingly institutionalized. As evidence they cite the formation at all levels of government of new agencies to represent and protect the consumer interest, i.e., Office of Consumer Affairs and the Consumer Product Safety Commission. Kotler (1972) points out that consumerism is not a fad because the issues which flamed the latest movement differ so much in character and force from previous movements that consumerism may be here to stay. He states that the current movement has resulted from a complex combination of circumstances, not the least of which 13 was increasingly strained relations between standard business prac- tices and long-run consumer interest. Kotler developed a paradigm for understanding the factors contributing to consumerism in the 1960's which tends to incorporate, concisely, the ideas of many writers (Table 2.1). According to Broffman (1971), consumerism is not a simple continuation of past protection agitation. Rather it puts to a test some of the basic values we have lived by until now (p. 16). Consumerism Issues Yokalem predicted in 1969 that consumerism would eventually subsume, or be subsumed by other areas of social concern. He cited inequities in the economic environment and the declining quality of the physical environment as examples. John Kenneth Galbraith speaks to these broader issues in his book, Economics and the Public Purpose (1973). His discussion of such topics as inequality of income, mal- distributing of public resources, environmental damage, inflation, and the crypto-servant role of the homemaker is causing some to question the assumptions on which our economic system operates. Others such as E. F. Schumacher,'h1his book Small Is Beautiful: Economics as if People Mattered (1973), discussed some of the same ideas about growth, public policy, and the use of resources. Linder (1970) raised some of these issues in his book, The Harried Leisure Class, in which he pointed out that consumption takes time-- time for shopping, use, and maintenance. And, beyond a certain consumption level, there is little time to enjoy consumption unless 14 Table 2.l--Factors Contributing to the Rise of Consumerism in the 1960's. Structural conduciveness . Advancing incomes and education . Advancing complexity of technology and marketing . Advancing exploitation of the environment Structural strains . Economic discontent (inflation) . Social discontent (war and race) . Ecological discontent (pollution) . Marketing system discontent (shoddy products, gimmickry, dishonesty) . Political discontent (unresponsive politicians and institutions) Growth of a generalized belief . Social critic writings (Galbraith, Packard, Carson) . Consumer-oriented legislators . Presidential messages . Consumer organizations Precipitating factors . Professional agitation (Nader) . Spontaneous agitation (housewife picketing) Mobilization for action . Mass-media coverage . Vote-seeking politicians . . New consumer interest groups and organ1zat1ons Social control . Business resistance or indifference . Legislative resistance or 1nd1fference Note. From "What Consumerism Means for Marketers" by P. Kotler, Harvard Business Review, 1972, 59(3), 50, Exhibit 1. there is someone to whom the purchase and maintenance responsibili- 15 ties can be delegated. The problems associated with affluence, such as increased product complexity and rising consumer expectations, are likely to continue, according to Kangum et a1. They attempted to determine the issues perceived as falling under the heading of consumerism. Their research indicated agreement on the following issues: 1. wider and complex in scope. Information (such as more informative advertising, clearly written warranties, etc.) Health and Safety (such as the high price of food, insur- ance, and hospital care) Repair and Servicing (such as improved servicing of appli- ances and automobiles) Pricing Issues (such as the high price of food, insurance, and hospital care) Pollution in the Environment (such as dirty air, water, excessive billboards) Product Quality (such as frequent obsolescence, product breakdowns) Consumer Representation in Government (such as a lack of consumer representation in government agencies)(Kangum et al. ,1975, p. 5). , Broffman (1971) states that "the new consumerism is much ties, transportation, safety, consumer representation, consumer education and it is inter-mixed with anti-poverty programs" (p. There appear to be social and ethical issues in the con- temporary consumerism movement. Kbllatt,Blackwell, and Robeson (1972, Chap. 22) distinguish between social responsibility and ethical responsibility. Social responsibility is defined as It is aimed at health services, utili- 16). 16 accepting an obligation for the proper functioning of the society in which the firm Operates and how it contributes to the society. Ethical responsibility is more fundamental. It deals with the detennination of how things should be, human pursuit of the high course of action, and the individual's doing what is morally right. The consumerism movement today incorporates elements of social and ethical responsibility as Opposed to Friedman's philosophy that business has one and only one social responsibility--to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game (1968). He defines rules of the game as engaging in open and free competition without deception or fraud. He goes on to state that "Few trends could so thoroughly undermine the very foundations of our free society as the acceptance of a social responsibility other than to make as much "Haney for their stockholders as possible" (pp. 113-114). Perhaps the consumerism movement may have been caused by too many businessmen Operating on the Friedman philosophy. Who is watching out for the ‘Fanfily and consumer's interest? In his book, In the Name of Profits, Iteilbroner (1973) documents cases of lying, cheating, and outright ‘Fraud by businessmen determined to make a profit without regard for any other consequences of their decisions. Government Intervention Literature Government's Role in Consumer Protection Responsibility for the public welfare is part of Article I of the Constitution of the United States. It was over 100 years IT .r-‘r :. ' ~' ' 17 after the Constitution was adopted, however, before any Congress took that constitutional charge seriously. The first thrust to impose controls on the economic giants and secure a place for the public interest in their operation took place in the early part of the 20th century (Swagler, 1975, p. 170). The two most important means of achieving this control were, and still are, anti-trust action and regulatory agencies. The Sherman Anti-Trust Act, passed in 1890, was designed to prevent the elimination of competition by forbidding monOpolistic practices and collusion (Adams, 1971, pp. 457-458). Although this legislation does have the effect of keeping prices down for con- sumers, it was primarily designed to preserve competition and pro- tect small businessmen. Because the Sherman Act was difficult to enforce, the 1914 Federal Trade Conmission Act was passed. This act spelled out spe-