Consumers' Attitudes on the Role of Advertising in Hong Kong -- What Happened in the Last Decade?

ABSTRACT - This paper summarizes the results of 5 empirical researches on consumers' attitudes toward the role of advertising Hong Kong conducted in the past decade. Consumers in Hong Kong perceived the purpose of advertising was to increase sales rather than to provide information. And it was shown that over the years, they were becoming more critical on the truthfulness of advertising as well.



Citation:

Suk-ching Ho and Yat-ming Sin (1985) ,"Consumers' Attitudes on the Role of Advertising in Hong Kong -- What Happened in the Last Decade?", in SV - Historical Perspective in Consumer Research: National and International Perspectives, eds. Jagdish N. Sheth and Chin Tiong Tan, Singapore : Association for Consumer Research, Pages: 262-266.

Historical Perspective in Consumer Research: National and International Perspectives, 1985     Pages 262-266

CONSUMERS' ATTITUDES ON THE ROLE OF ADVERTISING IN HONG KONG -- WHAT HAPPENED IN THE LAST DECADE?

Suk-ching Ho, The Chinese University of Hong Kong

Yat-ming Sin, The Chinese University of Hong Kong

ABSTRACT -

This paper summarizes the results of 5 empirical researches on consumers' attitudes toward the role of advertising Hong Kong conducted in the past decade. Consumers in Hong Kong perceived the purpose of advertising was to increase sales rather than to provide information. And it was shown that over the years, they were becoming more critical on the truthfulness of advertising as well.

INTRODUCTION

Advertising is a growth industry in the world economy. Between 1976 and 1980, international advertising expenditure increased by 18.2% per year, outpacing the global economic growth rate. Meanwhile, advertising expenditure in the' Asian region has been growing at even faster rates, with expenditure rising by an average of 24.5% annually between the same period (Sin 1984).

Advertising, of course, is nothing new. Its roots extended to civilizations of millennia ago. With the gradual increases in advertising activities, however, came a closer scrutinization on the roles and functions of advertising in the society. Today, the debate on the roles played by advertising is still a controversial one. Supporters of advertising claims that it directly or indirectly contributes to the development and functioning of our modern marketing system. Attackers argue that it contaminates the social tastes and interferes with consumer choice (Backman 1968, Telser 1968, Kirjner 1972, Greyser 1973, Steiner, 1973).

Undoubtedly, advertising is here to stay. On the other hand, the controversy on its roles also shows no sign of resolution. It is against this background that it makes academic sense to find out what and how the target of the advertisements --- the consumer public --- think about and evaluate the functions and effects of advertising.

ADVERTISING IN HONG KONG

Hong Kong has been acclaimed as one of the economic miracles in modern economic history. The performance of its advertising industry is no less miraculous.

Advertising expenditure in Hong Kong reached HK$1,275 million in 1982, up from HK$245 million in 1973. Over the period, advertising expenditure as a percentage of the GDP remained at approximately 0.7%, keeping pace with the economic growth. Another indicative measure reflecting the rapid growth is advertising expenditure per capita. As Table 1 shows, the advertising expenditure per capita was around HK$60 in 1973. Ten years later, this ratio has increased by fourfold, reaching HK$241 in 1982. Meanwhile, the number of advertising companies and agencies also increased from about 200 to 550 between the same period with an employment amounting to 3,500 people in 1982 (Hong Kong Economic 1982). Needless to say, advertising is fast becoming an invaluable promotional and competitive tool of the marketers in Hong Kong.

There is little doubt about the contributions of advertising to the economic growth of Hong Kong. Advertising, by acquainting consumers with the values of the products, widens the markets for them and pushes forward their acceptance by the consumers. By expanding markets or by safe-guarding existing markets for established products and by assisting in the realization of markets for new or improved products, the motivation of raising capital investment on the part of the businessmen is given a major impetus. The interacting results are an increase in employment and income to insure a continual economic growth and improvement in the standard of living as well as to provide the means of introducing new technological developments so essential to keep the economy dynamic. It was shown that advertising positively affected the GDP, induced capital investment and provided employment opportunities in Hong Kong (Ho & Sin 1985).

TABLE 1

GROWTH OF ADVERTISING IN HONG KONG

The above positive effect of advertising, however, is contingent on how well advertising is functioning in our society. In particular, it is contingent on how advertising provides consumers with complete and truthful information to help them in making a wise and rational purchase. It is in this setting that the focus of this paper is turned.

RIGHT TO BE INFORMED --- THE ROLE OF ADVERTISING IN HONG KONG

Hong Kong was established for the purpose of trade and its attitude has always been to keep the government's hands away from business. Given the laissez-faire philosophy of the Government, business firms in Hong Kong can virtually have a free hand in their pursuit to accumulate wealth without fear of much public scrutiny. With the development of the market economy, this "minimum intervention" attitude is bound to create problems. One of the problems is likely to concern with the issue of information acquisition.

Hong Kong is a free-enterprise economy and consumers here have, when compared with consumers in many developing or even developed countries, a high degree of freedom to choose. Such economic freedom, however, is contingent upon the existence of a "prefect" information mechanism for both sellers and buyer s in the marketplace and is meaningful only when consumers are-provided with adequate and unbiased product information to make a wise purchase decision.

Consumers can obtain their information from various sources, viz., their own experience, recommendations from referents such as friends and relatives, and/or advertising through the mass media. In a market economy, advertising through the mass media may be the most probable source of information for most products. Because of the pervasive nature of advertising, its effect as an information provider to consumers have been widely researched in the western countries. The first significant criticism of advertising made its appearance in the U.K. in 1710 when Joseph Addison directed his pen at advertising noting both the functions of advertising and the defects of advertising (quoted in Bauer & Greyser 1968, P.5). In the U.S., the first major survey on attitudes toward advertising was undertaken in 1938-39 (Bauer & Greyser 1968, P.397). Thereafter saw a stream of other related studies . Towards the end of the 1960s, the field seemed to have been exhaustively researched in the U.S. and no major study has been reported since the beginning of the 1970's. But not so in the case of Hong Kong.

In Hong Kong, concern over the role of advertising as an information provider is a late starter and only began to catch the limelight with the inception of the Consumer Council in April 1974. The Consumer Council was established admist a period of recession and rising prices and was entrusted "with the task of tackling the problem of inflation and profiteering, and protecting the interests of the general consumer" (South China Morning Post 1974). With increasing public concern over the surge in price of the basic commodity, rice, the Council was initially preoccupied with the task of stabilizing prices. It soon became obvious that the provision of price information alone was insufficient to protect the consumer interests. Subsequently, the scope of the work of the Council has been expanded.

At the heart of consumer protection in Hong Kong still remains the now famous consumer rights set forth by the President J.F. Kennedy of the U.S. in 1962. Much of the work done by the Consumer Council has been aimed at enhancing one or more of these consumer rights: ( 1) right of safety; (2) right to be informed, (3) right to choose, and (4) right to be heard.

According to Cohen (1975), consumer protection remedies can be categorized into 3 groups as follows:

(1) prevention aims at eliminating an abuse prior to its introduction;

(2) restitution hopes to restoring of property rights or the restoration to the former state; and

(3) punishment provides redress for aggrieved consumers or to deter future misconduct.

A thorough research into the activities of the Consumer Council in the past decade since its establishment has led a researcher to conclude "that the Consumer Council has been more successful in the prevention aspect of consumer protection through the dissemination of information" (Ho 1984). Constrained by the lack of legal power, the Council has little to do as far as "restitution" and "punishment" are concerned.

While the Consumer Council can provide as much information as possible to the consumers in the form of comparative product testings, marketing malpractices disclosures and free consultation through the consumer enquiry centres, it has little control over one powerful information source --- the advertising practices of business firms. In recent years, the Council has paid much attention to the practices of advertising which exert considerable influences on the daily purchases of consumers (Cheung 1982 and 1984). In the capacity of ensuring that consumers are provided with accurate and adequate information in the advertisements, it is imperative that the Council should have a clear picture on how the consumer public evaluates the role and function of advertising. It is to this issue that this paper now turns to.

MAJOR EMPIRICAL RESEARCHES ON THE ROLE OF ADVERTISING IN HONG KON

The Consumer Council in Hong Kong has just celebrated its 10th anniversary. With the inception of the Council witnessed a gradual increase in the awareness of consumers concerning their rights. This section tries to summarize the major researches on consumers' view on the role of advertising in Hong Kong in the past decade since the establishment of the Council. As a result of the recent origin of the consumer protection movement in Hong Kong, only 5 related empirical researches on the issue were pinpointed by the present authors as Table 2 shows.

In the 1977-78 study (Hung, Leung & Lo), respondents reacted to seven statements about advertising. The topics covered included the persuasive vs the informational aspects of advertising. An overwhelming majority of the respondents (81.1%) considered the purpose of advertising was to increase sales rather than to provide information. Because consumers did not think that advertising was meant to inform, they responded negatively to the following two statements:

(1) advertisements are helpful to me in buying (64.8% )

(2) An advertised product is more reliable than a non-advertised product (70.9%).

and divided on their attitude toward the statement "advertisement can help me understand more thoroughly about products" (51.4% agreed).

TABLE 2

A SUMMARY OF 5 EMPIRICAL RESEARCHES ON CONSUMERS' ATTITUDES ON THE ROLE OF ADVERTISING IN HONG KONG

On the other hand, though they considered that advertising was primarily aimed at increasing sales, they did not seem to be under the undue influence of the advertisements as far as purchase decisions were concerned. 62.7% disagreed with the statement "advertisements make me get confused in choosing products" and 72.6% with the statement "I am always influenced by advertisements to buy unnecessary things." 62.6% agreed that "I won't change my shopping plan despite lure of advertisements."

The perception of consumers that advertising was not intended to provide information was again reflected a more recent research (Sin & Cheng 1984) in which 82.4% of the respondents agreed with the statement "Most advertising provide insufficient information for consumer to make buying decision."

While the 1977-78 study was concerned with consumers' perception on advertising's functions and effects, subsequent studies turned more to the execution aspects of advertising especially in advertising's truthfulness. And it seemed that consumers have become more skeptical of the truthfulness of advertising with the passage of time. In the Frank Small and Associates study (1981), 48% agreed with the statement "TV advertising is exaggerated but basically honest." In the AGB McNair study (1982), the percentage of respondents who agreed to a similar statement, "I think that advertisement claims on TV are basically honest" dropped to 41%. Then in the Sin and Cheng study (1984), 81.5% of the respondents agreed with the statement "in general, advertisements do not present a true picture of the product advertised."

The largest-scaled survey to investigate the truthfulness in advertising so far was conducted by the Consumer Council (1983-84). The findings showed that of the 6000 advertisements content analyzed, an overall 24% of them were considered by the panelists to have contained misleading claims. Several categories of products, however, skewed to the high end as misleading advertisements. These products included medical treatments (87.6%), herbal medicines (74.4%), medicines (66.1%) and beautifying and slimming agents (64.3%)(Cheung 1984). As these are health related products or services, their advertising contents warrant closer examination.

IMPLICATIONS AND CONCLUSION

Robert Sabatino, co-author of the book "Consumer Protection from Deceptive Advertising" once remarked, "Exploitation of consumers has taken many forms, but none has been more openly perpetrated than fraud and deception in advertising" (quoted in Cheung 1984). Concern over the ability of advertising to provide information --- adequate and impartial information --- assumes particular significance in a free market system as Hong Kong. In the name of competition, marketers resort to differentiate their products from one another through various forms such as advertising and channel variations. Due to the pervasive influence of advertising, when it is abused, it becomes the worst form  of disserving consumer interests.

There has been little shift in consumers' attitudes toward the function of advertising over the last decade in Hong Kong. The purpose of advertising was perceived to increase sales rather than to provide information. And in the case where information was provided, consumers were skeptical about its truthfulness. In all fairness, advertising practices in Hong Kong are no worse than that in many other countries. However, there is still ample room for improvement. A point that worth mentioned is the fact that consumers seemed to have become more critical on advertising: while 48% of the respondents casted a vote of confidence in the honesty of advertising in the 1981 study, only 18.5% did so in the 1984 study.

On the other hand, development of the consumer protection movement in Hong Kong brought with it changes in the scope and extent of researchers' investigation on consumers' attitudes toward advertising. The Sin and Cheng study, for instance, has measured people's attitudes with respect to the social aspects, content and practices of advertising. With the rise of consumer awareness of their rights, there is clearly no room for complacence on the part of the business sector.

As a whole, this review carries some important implications to regulators, consumer interest groups, advertising practitioners and managers using advertising.

The advertising practitioners should take note of the criticisms as revealed in this review. At the same time, spreading of consumerism has enhanced awareness of consumer rights which demands more legislative efforts in restricting deceptive advertising practices. The advertising practitioners should work more closely with business people in advertising production and media planning, as well as to put more emphasis on what the consumers want to know rather than on what they want the consumers to know.

To the managers using advertising, outside efforts to regulate the activities of marketing are increasing and advertising is not going to escape from this growing web of control. Many of the contemplated legislations in Hong Kong are intended to provide the consumers with more information --- unit pricing, open dating, nutrition label. Faced with these increasing legislative efforts, business people may prefer self-regulation or no regulation at all (Sin 1984). However, such an idea cannot materialize unless they are more active in improving the negative aspects of advertising. Otherwise, further outside regulations which are unwelcome by both advertising will be forthcoming. business and

In a modern free society, there is little doubt about the responsibility of government in protecting consumer interests. The Hong Kong government, while still antihetical to the idea of control of the economy is paying more heed to the consumer needs. To the regulators, the negative attitude toward certain aspects of advertising signals that consumers are questioning the professionalism of the advertising industry. Their criticisms mainly focus on deceptive advertising and insufficient information. In response to these criticisms, relevant regulatory bodies are obliged to re-examine and reformulate their governing policies on advertising. Special emphasis should be put on the truthfulness and information sufficiency of advertising content. The "Product  Information Disclosure Ordinance" currently under discussion in the Hong Kong Legislative Council seems to be a possible step toward the improvement of advertising standard.

Legislation alone undoubtedly is no panacea. There are limitations of legislation particularly if the legislation is not enforced. In fact, government intervention does not appear to be the best solution either. The root power lies in the hands of the consumers themselves. Unless consumers are instilled a lasting sense on the importance of protecting their rights as consumers, there  is little that legislation can do. A case in point is the Trade Description Ordinance enacted in 1980 which deals, among other things, with complaints on advertisements of goods in various forms of the media. But "few complaints are received as few consumers are properly equipped with the knowledge or expertise to determine the truthfulness or otherwise of the information relating to the goods in advertisements" (Cheung 1984).

In light of this, the Consumer Council has decided to tackle the problem by successfully persuading the Education Department to include consumer education as part of the school curriculum in 1975. In addition to the program in schools, the Council can intensify the use of leaflets, public speeches, press release and consumer advice centres to disseminate, directly or indirectly, consumer-related information to heighten consumers' awareness.

Whether we like it or not, advertising has become part of our life. While advertising may have its undesirable features, its positive effects cannot be overlooked. How to maximize advertising's desirable aspects and to minimize its undesirable features is likely to be one of the strongest themes in society during the next generation.

REFERENCES

Backman, J. (1968), "Is Advertising Wasteful" Joarnal of Marketing, (January), 2-8.

Bauer, R.A. and S.A. Greyser (1968), Advertising in America: The Consumer View, Harvard University.

Cheung, 0. (1982), "Advertising and the Consumer," The Hong Kong Manager, (June), 12-15.

Cheung, 0. (1984), "Truth in Advertising," The Hong Kong Manager, (May), 16-18.

Cohen, D. (1975), "Remedies for Consumer Protection: Prevention, Restriction or Punishment," journal of Marketing, (October), 24-31.

Greyser, S.A. (1973), "Invitation in Advertising," Journal of Advertising Research, (February), 7-10.

Ho, S.C. (1984), "Consumer Protection (Or a lc~ck of It) in Hong Kong," Working Paper WP84-06, Faculty of Business Administration, The Chinese University of Hong Kong, 1-11.

Ho, S.C. , and Sin, Y.M. (1985), "Advertising and Economic Growth --- A Case Study of Hong Kong", in Y.M. Sin and H.M. Yau (eds.) Advertising in Hong Kong: Economic, Social, Legal & Managerial Perspectives, University Publisher & Printer.

Hong Kong, (1973-1984), Government Printer.

Hong Kong Economic (1982), Economic Reporter.

Hung, K.K. , Leung, T.Y. and Lo, Y.L. , (1978), .'The Perception of Consumerism Among Different Social Class in Hong Kong," Unpublished manuscript, 1-30.

Kirjner, I.M. (1972), "Advertising," The Freeman, (September), 516-528.

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Ming Pao Daily News, (September 23, 1981), 2.

Sin, Y.M. , (1984), "Hong Kong Executives Look at Advertising," The Hong Kong Manager, (December), 14-18.

Sin, Y.M. and Cheng, W.L. (1984), "Advertising in Hong Kong: The Consumer View, " Working Paper WP-84-08, Faculty of Business Administration, The Chinese University of Hong Kong, 1-15.

South China Morning Post, April 8, 1974.

Steiner, R.L. (1973), "Does Advertising Lower Consumer Prices?" Journal of Marketing, (October), 19-26.

Telser, L.G. (1968), "Some Aspects of the Economics of Advertising," Journal of Business, (April), 166-173.

----------------------------------------

Authors

Suk-ching Ho, The Chinese University of Hong Kong
Yat-ming Sin, The Chinese University of Hong Kong



Volume

SV - Historical Perspective in Consumer Research: National and International Perspectives | 1985



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