The Role of Standards Authorities in Consumer Decision Making in Western Australia

THE ROLE OF STANDARDS AUTHORITIES IN CONSUMER DECISION MAKING IN WESTERN AUSTRALIA

Frederick A. Frost, Western Australian Institute of Technology

ABSTRACT -

Consumer purchase decisions are becoming more and more difficult. Technological change coupled with other considerations such as greater degrees of choice are primarily responsible for this situation. This paper considers the role of standards authorities as an additional information sources in the decision making process.

INTRODUCTION

Todays consumers face a wider choice than their counterparts of the seventies. On the one hand they enjoy ever increasing standards of education and higher levels of descretionary funds and on the other the market is more competitive. Not only is there a wider range of options but also the opportunities are available in a greater variety of retail situations, from specialist boutiques to hypermarkets. In addition local offerings are in competition with national and international brands.

In order to capitalize on these new market opportunities the consumer must be in a position to differentiate between the offerings using various evaluative techniques.

Bearing in mind the wide range of commodities the average consumer purchases and, considering further the spectrum of technologies having some involvement in the development of those commodities, it would appear that the importance of external information is assuming greater significance in the decision to purchase.

This paper will consider the use of standards as a mechanism to benefit both producer and the consumer - a method that will assist the consumer to make more rational purchase decisions.

Various market related effects are assuming greater significance in terms of the consumer decision process. Figure I illustrates a range of considerations that may have greater or lesser significance in a particular situation. In any given situation some are diametrically opposed, others supportive of each other.

FIGURE 1

FACTORS AFFECTING THE DECISION TO PURCHASE

In the absence of any authoratative reference, the consumer will need to resort to other means to evaluate the various offerings. Evaluation can only be made where the information is in a form that is understood, verifiable and accurate. Instances abound where the consumer is faced with a baffling array of performance criteria, graphs, formulae etc. which are couched in technical terms and with which they are totally unfamiliar. Also, only certain information may be available to the potential customer whilst other equally important data is not. Unless the consumer can decipher the data it will remain impressive but meaningless.

All too often many of the basic needs the consumer has are not depicted, or are not presented in a meaningful way. This may not be due to any intent by the manufacturer to misrepresent the case but rather is a representation of the features versus benefits dilemma.

The use of an external authority to check the item against specific standards will in some measure relieve the consumer of this problem. We must remember that the standard is often based on an acceptable (negotiated) level of performance. It will not necessarily cater for the upper end of the expectancy scale. However, the prospective purchaser of the good on establishing that the product has met the expected level of compliance can concentrate on the particular benefits sought e.g. size, colour, materials of construction, shape etc.

There is little doubt that the advantages this evaluative system offers the consumer are significant.

THE CONCEPTS OF STANDARDS

Many aspects of society and community life are based on standards, e.g. moral codes, legal statutes, languages etc. We utilize standards as a basis for trade and commerce - e.g. length, mass, time etc. Without these and numerous other standards life as we know it would be impossible.

The International Organization for Standardization defines standardization as, "a process for formulating and applying rates for an orderly approach to a specific activity for the benefit, and with the cooperation, of all concerned and in particular for the promotion of optimum overall economy taking due account of functional conditions and safety requirements".

In the world of today, where technology affects the life of the individual to an unprecedented degree, standards assume greater importance than ever before.

The underlying social function of standardization remains, however, what it has always been; to codify the results of the community's aggregated experience up to a particular point so as to provide for the more efficient utilization of resources and to create a sound basis for further technological development.

The concept of standardization in industrial marketing is well accepted. An industrial customer seeks a level of quality that is consistent with defined specifications and intended use. The industrial buyer can either make use of company standards or use external screening mechanisms eg. large organizations such as Boeing Aircraft Corporation, United States Air Force, United States Navy have established basic standards across a wide range of materials. Organizations intending to offer their goods for purchase, have those products tested and if found acceptable are placed on an accredited list of suppliers to that agency.

Providing the standard is acceptable, the purchaser has available a third party means of supplier screening. When making purchases, today's consumer is confronted by a host of products under different trade names. Unlike the industrial purchaser, the consumer is often faced with a difficult choice, attended with a feeling of great responsibility. This is particularly so when the consumer is about to buy fairly expensive consumer products such as white goods, appliance etc. In such a situation, the customer would like to ascertain whether the article will provide long and dependable service.

Quality comprises many expectations on the part of buyers and users, but as it relates to standardization it can be defined as the ability of a supplier to consistently meet specifications. Quality control has come to be recognized over the years as a vital management function which carries with it a major impact on productivity and efficiency. In turn, this leads to increased profitability in that it assists in the reduction of waste, and in the reliability of both components and end products.(l)

The word quality, from the consumer viewpoint is clearly intended to convey a message of fitness for purpose.

WHAT IS A STANDARD?

A standard is a document containing a concise set of requirements including, where appropriate, the procedures or the means by which it may be determined that the requirements are satisfied.

Australian standards are based on what is most appropriate in practice. They do not attempt to attain an ideal which might be too costly to adopt under industrial and commercial conditions existing at the time. They are constantly revised to take account of new developments and to eliminate outmoded practices. (2)

WHY ARE STANDARDS DEVELOPED?

An Australian standard represents a consensus of the views of all the experts brought together on the committee responsible for the standard and all those consulted through public review. The whole system operates by cooperative effort and negotiation, not by majority voting procedures.

Requests for new standards may be received from any source such as a government department, a trade or professional association, a private firm or and individual. A typical sequence of events in the development of a standard is shown in Figure 2.

FIGURE 2

STANDARDS ASSOCIATION OF AUSTRALIA DEVELOPMENT OF A STANDARD

HOW ARE STANDARDS IMPLEMENTED?

Australian standards gain recognition from the fact that they are prepared and accepted by all interested parties represented on the drafting committees. Many standards derive authority from voluntary adoption based on their intrinsic merit. However, where a standard is concerned with the safety of life or property, it often finds compulsory application through reference in statutory regulations.(3)

The voluntary adoption of standards may be effected in several ways. Producers can decide to make products in compliance with a relevant standard and use standard tests and standard specifications in quality control and in general marketing.

Purchasers have the option of citing standards as a base for decision making. The mandatory adoption of standards is usually effected by reference in acts, ordinances and regulations administered by local, State and Federal authorities. In its most desirable form this is a direct reference to the standard without qualifications or modifications. Another mode of application of standards is through the use of the Standards Associations certification trade mark - the Australian Standards Mark.

Consumer behaviour models address the element of risk involved in the purchase decision process. After all, the purchaser is faced with the uncertainty associated with the question:-

Will the commodity deliver a set of acceptable experiences over a specified time frame? This represents a value concept and is therefore related to price.

Seen from the perspective of a purchaser who has not previously purchased the commodity in questions, a number of variables in existing models cater for the purchaser's dilemma. Considerations include information, brand comprehension, confidence, choice criteria etc.(4,5,6)

Based on the assumption that in many cases the purchaser does not have sufficient expertize to make a value judgement, the importance of external information sources assumes greater significance.

External sources of information can take many varied forms. Most of it well intentioned, sometimes it is limited in scope, some of it biased and unhappily at times, some overstated.

Whilst it is not the purpose of this paper to delve into the field of advertising, nevertheless we recognize that promotional material-often forms a significant element of the information referred to in consumer decision-making models.

indeed, cases will be cited where international organizations have misled the public. However, this element is catered for in law, by instrumentalities such as the Trade Practices Commission, Department of Consumer Affairs, etc. The general approach is summed up by Gallagher as follows:

Misrepresentation may be calculated, or at least partially innocent; it may be blatant or, because of omissions of fact and ambiguities, extremely subtle; it may be overt or covert; it may be indulged in equally by a sharp salesperson pressing on a single victim or by a large corporation. Generalizing still further it could be said that there is only one undesirable selling practice and that is the false and misleading advertisement.(7)

if a producer subscribed to the concept of meeting a standard, and, further, if that producer applied for and-was granted permission to afix the standards monogram to a specific commodity, both the producer and consumer would benefit.

ADVANTAGES OF THE STANDARDIZATION MARK FOR THE MANUFACTURER

* A reduction in wasted production time through longer production runs of a smaller variety, increased individual production, greater accuracy in production forecasts etc,

* A more steady demand, more effective marketing and distribution, a better basis for competition and a more competitive chance in overseas markets.

FOR THE DISTRIBUTOR AND CONSUMER (8)

Commodities with the standards mark:

* give the assurance that the commodity will serve its purpose,

* indicate consistent quality;

* obviate the testing of delivered suppliers;

* engender confidence in the manufacturer and the continued availability of the product;

* allow the standards authority to be involved in the case of complaints resulting from the serviceability of the commodity;

* promote more.economical consumer spending;

In the majority of industrialized countries certain generalizations are accepted.

(i) educational standards are rising

(ii) the overall standard of living is increas ing

(iii) the consumers enjoy higher levels of discretionary funds

Thus, they have an increasing ability to pay for additional wants. As stated previously, even allowing for the increasing intelligence of the consumer, the range of technologies they face in purchasing decisions is such that they are not able to fully evaluate and differentiate between many offerings.

Consider the following cases as reported in Australia.

Case 1

The widow of a business man drowned in a boating accident was awarded more than A$277,000 damages against a retailer who sold them defective life jackets.

In a reserved judgement in the Supreme Court, the judge said that tests conducted by experts had convinced him that the life jackets were not fit for the purpose made known to the retailer.

The judge found that the Sea-Gulf jacket was not of saleable quality and that it was a significant factor contributing to the businessman's death. The retailer of the life-jackets was awarded $A204,000 in a cross-action against the jackets manufacturer.(9)

Case 2

It has been found that some of the sunglasses worn by Australians are not keeping out as much sun as people think. The Federal Government has decided that all non-prescription sunglasses and fashion spectacles imported into or manufactured in Australia after October 1 1985 will be required to comply with a new mandatory safety standard.

The Attorney-General stated that excessive glare and exposure to ultraviolet radiation could harm eyes and increase the possibility of inflammation and cataracts. It is estimated that there are about three million pairs of sunglasses awaiting sale in Australia at any one time.

The Attorney-General stressed that most existing stocks comply with the more important aspects of safety standards and do not pose a hazard to consumers.00)

Case 3

Gas has always been an accepted energy source by the consumer. With the development of the North West Gas Project, gas is being marketed more intensively in Western Australia.

Recently the Western Australian State Energy Commission was instrumental in effecting changes to the installation procedures for instantaneous gas water heaters.

In this instance potential problems were-discovered in the incorrect flueing of such systems. The commission has gone to great lengths to inform owners or managers of dwellings equipped with such heaters to take immediate action to upgrade or replace them.(Il)

Case 4

The value of the standards mark to a manufacturer is clearly illustrated in the case of Hartnell vs Sharp Corporation of Australia Pty Ltd in the Australian Industrial Court.

The case had to do with microwave ovens. At the time in question, microwave ovens had not made a significant impact on the Australian market. The lack of market acceptance at that time could perhaps be explained in terms of the consumers basically conservative nature the novelty of the technology, etc.

This situation represents an ideal opportunity for the use of the technical endorsement by an independent standards authority. Unfortunately the company elected to publicize the fact that they had permission to use the standards mark whereas in fact this was not so.

In court, the company pleaded guilty to all ten charges. The Court found that the statement that every microwave oven produced was tested and approved by the Standards Association of Australia was completely and utterly false. Further, the company had not obtained the approval of the Standards Association of Australia. Further, that the Australian Standards were widely used by governments, statutory authorities and industry and that the Association was recognized as one of the most stringent safety authorities in the world and consequently, the misrepresentation that the ovens had been tested and approved indicates that it had been given a top class reputation. Mr Justice Joske stated:

"I regard this as a gross and wicked attempt to swindle the public of Australia by indicating that the oven has the greatest qualifications for safety and which every person buying it can rely upon as being absolutely safe,"

Justices Smithers and Evatt concurred.(12)

The company had budgeted for a promotional budget of A$60000. For comparative purposes a recent launch of a chocolate bar by the Rowntree Company in Australia bad a budget of A$lm.

Case 5 (13)

Recently, the Australian Consumers Association has renewed its call for a national safety commission after two-thirds of a sample of all electric blankets sold in Australia failed the ACA safety tests.

THE USE OF AUSTRALIAN STANDARDS IN THE CONSUMER MARKET

The purpose of the study was to evaluate the degree of perception and use of the Australian Standards mark in the Western Australian consumer market.

In terms of geographical area, Western Australia is the largest state in the Australian Commonwealth. It covers an area in excess of 2.5 million square kilometers, more than ten times the size of the United Kingdom.

The Perth metropolitan area accounts for some eighty three percent of the States population. The study was confined to this region. A questionnaire was designed to establish the following:

* were the occupants aware of Australian Standards?

* were they aware of the Australian Standards mark scheme?

* had they seen any promotional material associated with the mark?

* did the concept of standards influence their purchase decision?

Australian standards are available for a wide range of consumer goods ranging from toothbrushes to electric refrigerators, from wash basins to spas. There are in excess of 2500 standards, of which some 1500 apply to the consumer market.(14,15,16)

A response of 454 returns were received from the six hundred families sampled.

Sixty-one percent of all households sampled were not aware of Australian standards.

Of those that were aware of a national standards schemes, by far the majority, some seventy-five percent, were not aware that standards applied to typical household items.

Almost invariably the positive responses were associated with one or other member of the household working in industry where standards and specifications are well understood.

The surprising feature of the survey was that even when the household had knowledge of the standards system, it was not a factor considered when making consumer purchases. This was attributed to two major factors:-

1) They did not believe that the standards process operated in the consumer market.

2) The key consumer decision maker (usually the female) had little or no knowledge of the industrial market equivalent.

Overall, there was a total lack of understanding and appreciation for the standard.

The study extended to examining products in fifty-two outlets. Only four products exhibited the standard symbol.

An even more startling finding was that the promotional literature provided was almost devoid of standards information.

Only five percent of all products sampled made reference to my type of specification acceptance. In the main this related to local acceptance only.

Local authority acceptance is invariably a lower standard than the Australian standard. In most cases the local authority has a specific interest usually some safety aspect. Provided the article passes that specific test, it is passed for installation and use. It is this type of acceptance that is often referred to, In the case of Sharp it is interesting to note the remarks of Justice Juske:

"The microwave oven had the approval of the Sydney Country Council, "The Electricity Authority of New South Wales." But the Electricity Authority of New South Wales only exercises what it calls a measure of control over electrical goods ... and also to the fact that models are examined but not every instrument or article which is sold is examined, it is no wonder that many of the articles which may have the approval of the Electricity Authority of New South Wales once brought are soon out of use because they have broken down."(12)

CONCLUSION

There is obviously a total lack of understanding in the consumer market of the use and benefits of the standards scheme.

In discussions with the Standards Association of Australia it became obvious that the Association had, in marketing terms, adopted a 'low profile'. The Association operates entirely on a non-profit basis. The principal sources of funds are proceeds from the sale of publications; a grant from the Commonwealth Government, annual contributions from State Governments and subscribing members, etc.

Whilst it has a high profile in industry and commerce, this is not evident in the consumer market. The Association has not effectively presented its case to the consumer.

The Standards Authorities in the United Kingdom, South Africa etc. have a far wider acceptance - due no doubt to the fact that those bodies have promoted their mark in both the industrial and consumer markets.

A two pronged approach is necessary. The Association needs to promote their mark on a wider basis using a pull strategy. Equally, manufacturers must realize the importance of the mark as a marketing tool. It is a significant mechanism for differentiating a product. Manufacturers, therefore should be advertising the mark as it applies to their product/s,

REFERENCES

(1) Standards Association of Australia, Annual Review 1983-84.

(2) Standards Association of Australia, "What it is and what it does", March 1984.

(3) Standards Association of Australia, Procedures for the Preparation of Australian Standards, Document 748, September 1983.

(4) Engel, J.E., Blackwell, R.D., Consumer Behaviour, New York, The Dryden Press, (19821).

(5) Williams, H.W., Consumer Behaviour, Fundamental Strategy, St Paul Minnesota, (1982).

(6) Berkman, H.W., Gilson, C., Consumer Behaviour, Boston Massachusetts, (1981).

(7) Pengilley, W., Advertising Practices Act, Sydney, CCH(Aust) Ltd., (1981).

(8) Standardization and the SABS Marks, South African Bureau of Standards, (1984).

(9) Damages for Faulty Jackets, The West Australian, June 8, 1985,

(10) Government Turns Its Gaze on Sunglasses, The West Australian, June 15, 1985.

(11) State Energy Commission, Sunday Times, June 2, 1985.

(12) 'Hartnell v. Sharp Corporation', Australian Trade Practices Reports, 1140-003, CCH Australia Ltd., (1978).

(13) Tests Show Most Blankets Unsafe, The West Australian, May 28, 1984.

(14) Australian Standards "Consumer", Standards Association of Australia, August, 1984.

(15) Standards Association of Australia, "Standards for Textiles and Clothing" July, 1984.

(16) Standards Association of Australia, 'Safety', July, 1984.