Consumerism 50 Years Later

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Where Does Consumerism Stand Today?

Philip Kotler

I received an invitation from my friend Gautam Mahajan (gautam.mahajan@gmail.com) to consider updating my 48 year old Harvard Business Review article on “What Consumerism Means to Marketers” (HBR, May-June 1972, Vol. 50, Issue 3, pp.48–57). Gautam would like to publish my update for the benefit of his readers of The Journal of Creating Value. He wonders what has changed about consumerism in the last fifty years. What are the current consumer issues, and what impact has the coronavirus pandemic had on consumerism.

Consumerism is a social movement to support the rights and interests of consumers. It stands along with other social movements such as the labor movement, the women’s movement, the environmental movement, the civil rights movement, the LGBTQ movement, and the peace movement. Each of these movements cycle between periods of great attention and action and periods of relative quietude. In my 1972 article on consumerism, I pointed out three different periods when consumerism erupted and consumers made clear their interests and demands. The question is what major changes have impacted consumers in the last fifty years.

The Main Changes in These 50 Years with Impact on Consumers

We need to acknowledge the vast improvements in goods and services available to today’s consumers. The economist Seth Godin wrote a dramatic picture of how things looked way back in 1960 (Seth Godin, “58 Years Ago,” July 18, 2018).

The world was a twitch away from total nuclear destruction. White bread was a health food. Diabetes and obesity were relatively rare. The newspaper was the way most people heard about the news. We thought things were moving very fast, frighteningly fast. Women rarely worked outside the home, and the Rev. King was a relatively unknown preacher. No one owned a computer. The number of books published every year was quite small, as was the local bookstore. It was almost impossible to spend more than 45 minutes a day keeping up with current events. It was against the law for blacks and whites to marry in Virginia, and for gay couples to marry just about anywhere. Apartheid was mostly unremarked upon in the US. UPS never came to your house. A long-distance phone call was a big deal. Air condi­tioning was rare, bottled water had not been invented yet, there were no billionaires, there were three or four channels of TV, movies were only shown in movie theaters, and most dangerous diseases would certainly kill you. The air and water were clean, but we were work­ing overtime to make them dirty. Congress wasn’t a version of pro wrestling. Milk came in only one formulation (whole), you probably worked at the same company for a very long time and relatively few people went to college.

Today’s consumers are treated with reliable cars, multiple branded food products, widespread air conditioning, a huge number of television channels, many new kitchen appliances and equipment, the smart phone, information a click away, and face to face calls on Facetime or time on Zoom.

We can honestly say that consumers gained a great deal of better living in 50 years, thanks to a high performing Capitalist economy and its innovativeness.

Major New Features of Consumer Life Today

1. The Digital Revolution with its computers, Internet, smart phone, Wikipedia, and social media (Facebook, Google, Instagram, etc.)

2. The ability to order almost anything to be delivered by Amazon, Walmart, or other vendors and delivered with speed.

3. A heightened determination by major companies to please their customers and meet or exceed customer expectations.

4. A movement by more companies to satisfy their employees as well as their customers, reflecting a move from Shareholder Capitalism to Stakeholder Capitalism.

5. More companies ready to take a stand on one or more social issues and show their values.

6. More companies ready to consider how their operations impact the environment and how they can reduce waste.

7. The terrible impact of the coronavirus pandemic on customers’ lives, livelihood and mobility.

8. The increased tribalism dividing the nation’s citizens and paralyzing government from taking needed actions on critical issues facing citizens.

9. The persistence of racial and ethnic segregation and discrimination hurting the nation’s minorities.

Let’s highlight the main issues facing today’s consumers.

What are Today’s Main Consumer Issues

1. Many poorer American communities lack good water and healthy living conditions and there is a shortage of stores to serve their routine needs.

2. Prices are very high and unaffordable in pharmaceuticals, health care insurance, cost of college education, and several other product areas. These high prices could easily ignite consumer action groups to propose new policies or boycotts.

3. The nation’s economy creates major packaging waste affecting land and water quality and this raises questions about other ways to provide products safely.

4. The economy is saddled with many brands lacking much differentiation with the result that stores are much larger than they need to be to provide consumers with what they really need and want.

5. Many consumers wish that they had a larger array of healthier foods containing less sugar, salt and fat.

6. The need of the nation to measure not only GDP but also track whether people’s happiness or well-being is improving or declining from year to year.

7. Many consumers wish for more affordable housing and better child care support.

8. Many consumers are unhappy about the loss of their privacy to companies that collect so much financial and media information on consumer behavior.

9. Many consumers wish for less advertising interrupting their programs and shouting about medical illnesses and cures or sensational automobiles, etc.

10. Consumers are concerned with the growing level of income inequality, the rising number of billionaires in a country with 15% poverty and wages unable to deliver a middle class living standard.

11. Consumers are concerned with whether production and consumption can continue to grow without harming the planet and hoping that we can move toward a more circular economy marked by recycling, reuse, repair and recirculation of existing goods

12. Consumers welcome real product improvements but worry that a lot of planned obsolescence do not introduce real improvements but just style changes to make current working products seem dated.

13. Consumers wish that automobile congestion could be reduced so that drivers can reach their destination In a much shorter time period.

14. Consumers want the continuation of strong consumer protection programs and agencies such as the U.S. Food and Drug Administration (FDA), the Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency (EPA), and the National Highway Traffic Safety Administration.

15. Consumer have conflicting views on Covid pandemic regulations including lockdowns, mask wearing, social distancing, and avoiding partying and other normal pre-Covid social practices. The pandemic is leading to much reduced consumption and drastic changes in how consumers buy, communicate, work, learn and play.

All of these concerns deserve much more discussion and analysis. Consider the last question of consumer protection programs. Have American consumers benefitted from any new legislation designed to protect or enhance their lives?

The most prominent legislator seeking to increase consumer protection has been senator Elizabeth Warren. In 2007, Warren proposed establishing the Consumer Financial Protection Bureau (CFPB). It was finally established by the Dodd-Frank Wall Street Reform. Included was the Consumer Protection Act of 2010. The CFPB aimed to create stronger consumer financial markets, increased transparency in the marketplace, and necessary safeguards against predatory lending practices.

In 2019 the CFPB had 1,540 employees and an annual budget of US$533 million.

The CFPB estimates that it has returned almost $12 billion to nearly 29 million wronged consumers. Consumers at Bank of America, Citibank, and JPMorgan Chase received $1.7 billion in refunds after they were charged for needless and unwanted services.

A consumer act or practice is viewed unfair when it causes or is likely to cause substantial injury to consumers that consumers cannot avoid. Unfortunately, this consumer watchdog agency CFPB has gotten smaller, quieter and less active under Trump. The Republicans were never happy about CFPB and made sure that Elizabeth would leave the CFPB not long after it was established.

Conclusion

This is intended to be a working paper of notes. Hopefully consumer researchers and advocates will seize on one or more consumer issues and develop further in our understanding and possibly supporting legislative policies. We will have to continually deal with the question of what satisfies consumer desires and what truly serves their short and long run interests.

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