A Study on Consumer Problems/Protection Issues in Turkey

A STUDY ON CONSUMER PROBLEMS/PROTECTION ISSUES IN TURKEY

Eser Borak, Bogazici University

ABSTRACT -

This paper first summarizes the historical background information which traces the development of consumerism issues in Turkey. Then the results of a field study are reported in terms of criteria consumers use during purchase of and complaints with products and services, sources of information utilized and responses to dissatisfaction. The paper concludes with the implications for the consumer, business firms, public institutions and the researchers.

INTRODUCTION

In the contemporary meaning "consumerism" and interest in consumer policy/protection issues are quite recent in Turkey. Empirical research on the problems of Turkish consumers is very sparse, too. The purpose of this paper is to briefly review the evolution of consumer protection activities, the factors underlying the importance of consumer protection in Turkey; and to present the results and implications of a comprehensive field study on consumer-related issues in Turkey. In the first part of the paper the background information will be given, in the second part the field study will be discussed.

HISTORICAL BACKGROUND

During the Ottoman Empire there was an efficient system of consumer protection, the reminiscences of which can still be seen today. That is why the evolution of consumer policies/protection in Turkey should be discussed by going back to the Ottoman Empire period. In the 17th century we see closed economy in the rural and open markets in the urban areas where craftsmen were performing all the marketing activities. The State had institutions controlling the market place, quality and prices of goods and activities of persons involved with production and distribution.

First, there were crafts' associations called 11 guilds". Each guild had an auto-control system. There was the guild statute clearly pointing out the regulations and punishments which ranged from "bastinado" (for example, if the shoe is torn in a short period, the shoe-maker would be punished by public flogging) to being sentenced for death (for example, the person who added bran to the ingredients of bread was punished by being sentenced to death (Koqu 1968)). Each guild had its own "Elders' Council" who decided on the quality, grades of products and resolved pricing problems. A craftsman's business could be temporarily or permanently terminated. The rules and punishments were not only on paper, they were exactly applied as specified.

Secondly there was the "narh" system (official rates of prices). Depending on the quality and differences of the products, different fixed price levels were officially announced.

Thirdly, there was the "Qadi" (judge) and the "lhtisap Agasi" (Municipal Agha collecting fees) who inspected the market place continuously. These institutions formed a mixed model which worked efficiently to protect the consumer against the malpractices of suppliers/marketers/craftsmen. Guilds were terminated in 1839, thtisap Agaligi in 1854 and narh system in 1865. Today, Chambers of Commerce and Industry can be considered similar to guilds as far as their functions are concerned and municipal control officers system has a resemblance to 1htisap Agaligi.

We don't see any noticeable interest or activities in the consumerism area in Turkey till 1970's. Since then there has been an emergence of growing interest in consumer problems arising from (a) the economic and market structure in Turkey, (b) activities of the sellers and (c) characteristics and behavior of the consumers. These three sources are briefly discussed below.

Economic and Market Structure in Turkey

Turkey has a population of 49.3 millions (Statistical Pocket Book of Turkey 1984) with an annual growth rate of 5.9%, per capita GNP of U.S. % 1013 (Prime Ministry Institute of Statistics 1985), unemployment rate of 16.57 (Turkish Economy, Beginning of 1985), inflation rate of 52% (Wholesale and Consumer Price Indexes Monthly Bulletin 1984).

Since 1970, due to rapid industrialization consumption was stimulated, and changes in the life style and consumption patterns together with the development of the commercial and services sectors led to excess demand for most of the industrial and consumer products and the sellers' market dominated.

Since 1980 the prevailing economic policy was towards decreasing the aggregate demand. Real wages were decreased to 50% of their 1977 level by keeping rate of increase of nominal wages below the inflation rate and by letting free interest rates, profit margins and rents (Demirgil 1983). This income policy decreased the demand, to a certain extent, of basically the government employees and workers (approximately 25 million people). The devaluation of turkish lira vis-a-vis U.S. dollar led to frequent increase in prices of inputs of production, prices of goods and services in the public and private sectors. The full incidence of the increases were reflected to the consumer. Because of the new economic policy, there have been attempts for establishing free market economy and easing of import regulations. Liberalization attempts increased the supply and variety of certain goods such as food, durables and capital items, led to particular improvement in domestically produced goods, but imperfect structure of the market still continues. On one hand, there are few dominating firms which have formal written or informal/implicit agreements on controlling the production level, pricing and distribution, "fruhstuck cartels". On the other hand, there are many small firms which have survival problems due to high interest rates for credit, lack of educated businessmen and marketing managers. Most of the business persons are after short-term profit maximization and are not involved with consumer protection and social responsibility issues. Profits and margins of the intermediaries are high. There is still the domination of the "sellers' market". There are no voluntary consumer protection associations.

Activities of the Sellers

When sources of consumer problems are investigated on the basis of marketing mix elements, several issues can be pointed out.

As far as the product element of the mix is concerned, there are usually dangerous, defective, spoiled, rotten products/goods. Quality control is not at a satisfactory level. Product labels are often deceiving, misleading and/or not giving adequate information about the ingredients and/or duration, date of last usage, and precautions against and while using. Terms of sale or contract, especially in the service industries like insurance and banking are ambiguous, difficult to read and comprehend because of the form and content of information.

Because of the imbalance between supply and demand for almost all products, and high inflation rates in the economy, very high prices are charged. Although most of the controls by public authorities are on pricing element of the marketing mix, causes of price increase are infrequently investigated. Some attempts at setting unit prices have been made, however the results were not satisfactory.

Promotion oriented activities have increased significantly especially after the year 1970 although the relative importance of these expenditures in GNP is still very low. Radio and TV advertisements are controlled by a self regulating agency and they are far from being satisfactory. in advertisements emotional rather than rational appeals are emphasized and there is often inadequate information about products/services, their selling points, and places of purchase.

Characteristics and Behavior of Consumers

Due to low level of education and insufficient information, consumers cannot make comparisons among alternative products/services and brands; even if information is available, because of the form of information, they may not utilize it. Most of the product differentiation activities confuse the consumers at the market place rather than helping them in their purchase decisions.

In Turkey, as Thorelli and Sentell (1979) point out for other LDC's, most of the consumers try to attain their first order needs and adjust their standard of living accordingly. Thus, they have a low level of aspiration and they are satisfied mostly with what they get. However, there is also a segment who is well-informed and have a high level of aspiration. If the amount at stake is little, the Turkish consumer does not think it is worth taking an action Ozsunay 1983). Court expenses are high and trials are time-consuming. There is no class action. Consumers do not want to lose time, energy and/or money by individually applying to the court (Ozsunay 1983).

As can be seen from the background information related to the history of consumer policy/protection and problems of the consumer in Turkey, the importance of the subject for Turkey is evident. However, the empirical research in Turkey related to this subject is very limited. With the objective of exploring the areas related to consumer policy/ protection issues, a field study, discussed below, was conducted in Istanbul.

FIELD STUDY ON CONSUMER ISSUES

Design of the Study

The study was conducted by personal interviews. The data collection instrument was a structured questionnaire administered by Bogazici University Management School students who were trained and given detailed information on every aspect related to the study to eliminate the interviewer bias. Based on the census results of 1980, a random proportionate stratified sample of women were chosen from fourteen provinces of istanbul. A total of 466 valid questionnaires were obtained. The sample consisted of women whose ages ranged from "18 to 60 and older". The distribution of women in the "19-29", "30-39", "40-49" and "50 and over" age groups were approximately 24%. Seventy-four percent of the sample were married, mostly for 11-30 years, and has two children. As for their educational background, they were mostly secondary school graduates (55.5%). A little over 73% were not working whereas, 19.2% had full-time and 7.3% part-time jobs.

Information was collected on the following points:

(1) The respondents were asked first about the attributes/criteria that they consider in the purchase of sixteen types of products/services, ordering the criteria according to importance of each for them. The questions were asked in a matrix form, columns of which were 16 products/services and rows were the criteria;

(2) The sources of information that the respondents used in purchasing/using each of these products and services;

(3) The types of complaints of the respondents after purchase/usage;

(4) Responses to dissatisfaction, that is, whether any action was taken in case of complaint, if so what type of action; if not, the reasons for not taking any action;

(5) Consumers' Perceptions on such issues as, who should be involved in consumer protection activities; whether the consumer has legal rights in case of complaint/dissatisfaction after purchase/usage, and the types of perceived rights; and the perceived importance attributed to information handling versus to complaint handling institutions;

(6) Types of behavior shown under specific complaint/problem areas such as, weighting (missing quantity), spoiled (rotten) food, overpricing, torn shoe, disfunctioning refrigerator, impurities added, nonhygenic products/conditions, out-of-date medicine, uncollected garbage, and cut-offs in water, electricity and natural gas.

Due to space limitations, findings on the first five parts will be presented here. The last point will be discussed in a forthcoming paper.

Findings on Criteria/Attributes Considered in Purchasing

Table 1 indicates the types of criteria/attributes considered important in the purchase of products/ services studied. Respondents were instructed to choose the relevant criteria for each purchase and rank order by the importance attached to each. Although the order of criteria changed for each product category, some general patterns can be observed from the results. On the basis of each product group, the first three important criteria are listed in Table 1.

TABLE 1

THE MOST IMPORTANT CRITERIA/ATTRIBUTE IN PURCHASING

Findings on Sources of Information Utilized

Respondents were asked about the sources of information they utilize in purchasing or using each one of these products and services. Types of in formation sources covered were: advertising; expert opinion; news from T.V., radio and press; personal experience; related private and public institutions such as Chambers of Commerce and Industry, Municipal Administration; friends and relatives; and others. Table 2 presents the results on proportion of respondents using each type of information source across six product/service categories.

Information from TV, radio and press was relatively utilized less by this sample of respondents. Those receiving information from this source were mainly either consumer durables purchasers (31.3%) or cleaning materials and toiletries purchaser (27.7%). It should be noted that a similar pattern was observed with the use of advertising as an information. Those reporting their own "personal experiences" as a source of information are mostly purchasers of ready wear and accessories (85.1%), food items (82.8%) and household cleaners and personal toiletries (71.9%). By far, it is the most frequently mentioned information source across the product groups, except pharmaceuticals and utilities.

TABLE 2

TYPES OF INFORMATION SOURCES UTILIZED (IN PERCENT)

Use of "related institutions" as a source of information is mostly reported by the users of utilities (35.3%). "Friends and relatives", on the other hand, were mostly consulted in the purchases of consumer durables (46.7%) and ready wear and accessories (30.1%). Salesperson or the selling place were the most frequently encountered information under the "other" sources category.

Findings on Responses to Dissatisfaction: Complaints and Actions Taken

Another main objective of this study was to find out whether the respondents had any complaints with the products and services after purchase or usage. In case of complaints, whether or not any action taking took place was probed and the types of actions were investigated. Reasons for not taking any action were also examined. Table 3 provides a summary of these major issues.

Basically, the highest rate of complaints were found with utilities where percents of total sample complaining were nearly 62 with "water", 55.5 with "electricity", 54.4 with "public inner-city transportation", and 47.7 with "local gas utility". In the case of food items, the highest rates of complaints were observed with "milk and milk products", followed by "fresh fruits and vegetables" and "meat, poultry and eggs". Ninety percent of the complaints were related to "quality" factors. Complaints about "high prices" were mentioned by 50% of those indicating some dissatisfaction. In the milk products group, there were some complaints about the "odor of the container". Those taking some kind of action ranged between 10.3% and 1.0%. In 65% of the cases, the most frequently taken action was to go back to the place of purchase and have the product changed. Essentially for the high prices (above list prices) of products, appeals to the municipal authority were made. The outcomes were either closing of the store for a number of days or payment of some fines.

Out of the total sample nearly 22% respondents reported having some complaints with household cleaners and personal toiletries. Those who took some type of action were only 2.1% of the complainers. "Quality" and "addition of impurities" were the most frequently mentioned reasons for complaining. Some respondents indicated that they went to the police station to voice their complaints and had the goods returned.

TABLE 3

RESPONSES TO DISSATISFACTION ACROSS PRODUCTS/SERVICES

Nearly 26% of the respondents had complaints with the purchase of pharmaceuticals and only one person (0.9%) took action. Most of the complaints were about "out-of-date medicine".

Those reporting dissatisfactory experiences with consumer durables consisted of 44% of the sample. Across all the product/service categories action takers were mostly the purchasers of this product group. Almost 35% of the complainers took some action. Complaints were mainly related to "technical problems" with the product. Usually either the repair service or the producing firm was contacted, however the results obtained were not satisfactory enough.

In the ready wear and accessories group, "shoes and handbags" were the most complained about items. Of the total sample 44.7% reported complaints and 12.4% of the complainers took some action. Basically complaints were related to "quality", "default in manufacturing", and "size mismatches". Place of purchase was contacted and outcomes were either to repair or exchange with a new one. In some cases, however no solution was obtained. More respondents both complained with and took action in the case of "ready outwear" purchases than the "underwear" ones. The types of complaints with both ready wear items were related to "quality", "default product" and "discrepancies in size and color". Complainers often went to the place of purchase and got either cash refund or had the good exchanged. Yet a high percentage of respondents had unfavorable or negative outcomes with their attempts in taking action.

It is interesting to note in Table 3 that although the complaint rates are higher in the case of utilities, number of action takers are much less; especially in the case of innercity transportation services. The most frequently mentioned complaints with utilities were related to the "unavailability of the service", "technical problems", and "high fees". Actions were taken by appealing to municipal officers. Responses given were often unfavorable. Sometimes municipal administrators responded by giving information or repair service.

Findings on Consumers' Perceptions

Distribution of responses given to the question of who should be involved in the consumer protection activities were as follows (multiple responses were allowed): State (57.5 percent), municipal administration (57.1 percent), legal institutions (53.9 percent), consumer representatives (30.3 percent), occupational committees (14.8 percent), Chambers of Commerce and Industry (12 percent), Women's associations (11.4 percent) and other (such as Turkish Standards Institute, mass media representatives, Health Protection Agency, etc., 6.5 percent).

With respect to the issue of whether the consumer has legal rights in case of complaint/dissatisfaction, about half of the sample responded by saying yes (51.8 percent). The stated legal rights mentioned were: appeals to the court, to the related institutions, returning goods, refunds, right to complain (without stating where to).

In terms of the consumer's perception as to the relative importance of information handling versus complaint handling institutions, the distribution was 49 percent, 50.1 percent respectively.

DISCUSSION AND IMPLEMENTATIONS

Findings on "criteria considered in purchasing" products/services indicate market opportunities to the national and multinational companies, provide information as to what criteria to satisfy and/or educate the consumers' about. As Table 2 shows, personal sources are found to be the major source of information for all products except pharmaceuticals for which the perceived risk is high. Expert opinion (doctors and pharmacists) is the main source for this product. For consumer durables, household cleaners and personal toiletries, advertising is also an important source of information. This is because of heavy advertising of these products, especially on T.V. In general, objective, correct, prompt sources of information are lacking in Turkey.

Complaint rates are higher for utilities than other products, but percentage of action taking is low. These results could be interpreted in terms of attitude toward official institutions, escaping from bureaucracy and the feeling that shortages in utility services are expected. Highest action-taking rate is reported for consumer durables. One explanation is that the amount at stake is high, another is the guarantees given. Also, Turkish Standards Institute resolves problems of the consumers for all the products bearing the TSE mark. The complaints seemed to be less for food products, probably because the consumer tries to reduce the risk by choosing products/brands on the basis of personal experience. The most important reason for not taking any action was the belief that "nothing would change even if they had taken any action". Underlying this belief is the predominance of fatalism, and the length of bureaucratic formalities with unsatisfactory results.

The majority of the respondents are found to be unaware of their fundamental consumer rights. As pointed before, they are confused about their perceived legal rights, also about how and where to complain. in terms of priorities among policies related to consumer protection, developing consumer awareness should be placed at the top of the list. Press and television and radio which are publicly owned in Turkey, can effectively be used. As found in the field study, the state is expected to play the lead role in the activities at least initiate them. As a matter of fact, in the 1982 Constitution, consumer protection is stated to be among the basic responsibilities of the State. Consumer representatives are also perceived by the respondents to have an important role in consumer protection. Despite lack of information, the consumer desires to have a voice in the solution of his/her problems, but is in need of stimulation and guidance.

REFERENCES

Demirgil,D.(1983), The Turkish Economy 1983, TUSIAD.

Kocu, Ekrem R.(1968), Baris Dunyasi, Sayi: 70.

Ozsunay, Ergun (1983), "Turkiye'de Tuketicinin Korunmasi", paper presented at "Consumer Protection Seminar, Istanbul University, 7 (May).

Prime Ministry State Institute of Statistics (1985), Turkey, the 4th Preliminary Estimation, (March).

Statistical Pocket Book of Turkey (1984), Prime Ministry State Institute of Statistics, Turkey.

Thorelli, Hans and Gerald D. Sentell (1979), "Consumer Ecology in the LDC: The Case of Thailand", Proceedings of the Academy of International Business, Honolulu, Hawaii, (December), 324-333.

Turkish Economy, Beginning of 1985, Istanbul Chamber of Industry (February).

Wholesale and Consumer Price Indexes Monthly Bulletin (1984), Prime Ministry State Institute of Statistics, Turkey.