Consumerism in Developing Countries -The Brazilian Experience

ABSTRACT - Consumerism in developing countries has not been analyzed and discussed in current literature. In part this has been due to the lack of an appropriate methodological framework. This paper adopts a model developed by Kotler to the analysis of consumerism in developing countries. Consumerism in Brazil is explored as a case example. Guidelines for policy are suggested.

Citation:

John Stanton, Rajan Chandran, and Jeffrey Lowenhar (1981) ,"Consumerism in Developing Countries -The Brazilian Experience", in NA - Advances in Consumer Research Volume 08, eds. Kent B. Monroe, Ann Abor, MI : Association for Consumer Research, Pages: 718-722.

Advances in Consumer Research Volume 8, 1981      Pages 718-722

CONSUMERISM IN DEVELOPING COUNTRIES -THE BRAZILIAN EXPERIENCE

John Stanton, Temple University

Rajan Chandran, Temple University

Jeffrey Lowenhar, Temple University

ABSTRACT -

Consumerism in developing countries has not been analyzed and discussed in current literature. In part this has been due to the lack of an appropriate methodological framework. This paper adopts a model developed by Kotler to the analysis of consumerism in developing countries. Consumerism in Brazil is explored as a case example. Guidelines for policy are suggested.

CONSUMERISM IN DEVELOPING COUNTRIES THE BRAZILIAN EXPERIENCE

Introduction

Consumerism in the United States has received much attention in recent business literature. Most of the articles dealing with the topic have bean descriptive, commenting on its importance and implications, and/or prescriptive, outlining alternative activities and policies for consumers, governments, and firms. However very little attention has been paid to consumerism abroad, especially among developed and developing countries where consumerism is in its infancy or early growth stage. In these countries, protest over consumer issues has advanced from basic causes such as lack of food, clothing and shelter; to more sophisticated issues like consumer information reforms, consumer education, and consumer protection. Since a large part of American trade is with these developed and developing countries, government policy makers, consumer behavior researchers and the business community must be aware of and concerned about the growth of consumerism in these countries and its economic and social ramifications. For example, promotions used by the baby food subsidiaries of Nestles and Bristol Myers have been attacked in many developing countries (Sethi 1978). These firms have been held responsible by its critics for the unintended deaths of infants, which resulted from the misuse of their products. There has also been an increasing incidence of government intervention and control of all aspects of business life abroad. It is essential that American business firms strategically intervene when confronted with the growth of consumerism in developing and developed countries, rather than take a benign stance. Governmental policymakers can also learn from studying consumerism abroad by noting the methods used by other governments in tackling this issue. For example, Gazda (1977) has noted that the Canadian Government has influenced the growth of consumerism by timely and active responses. Despite its importance, international consumerism has not been systematically discussed in current literature. In part, this has been due to the lack of a methodological framework for examining and comparing consumerism in developing and developed countries.

In this paper the authors will attempt to (1) discuss the global use and interpretation of the term "consumerism" by examining some current consumer literature (2) analyze consumerism in Brazil using a theoretical framework developed by Kotler, (3) highlight the social and economic implications and (4) suggest guidelines for consumer policy. The article focuses on Brazil because: (1) it is a developing country faced with problems which are typical of those encountered in developing countries; (2) it contributes significantly to the overall Latin American economy by virtue of being the biggest country in Latin America and (3) the authors have been able to gather first hand information during recent visits.

Some Current Definitions

A determination of whether historical and current consumer movements can be adequately characterized by universal definitions requires an analysis of current definitions and examples.

Buskirk and Rothe (1970) in a oft quoted definition of consumerism characterize it as:

"The organized efforts of consumers (whatever the economic system they live under) seeking redress, restitution and remedy for dissatisfactions they have accumulated in the acquisition of a standard of living." (emphasis ours)

Hermann (1970) on the other hand explains consumerism as:

"A conglomeration of separate groups, each with its own particular concerns, which sometimes form temporary alliances on particular issues."

Kotler (1972) defines consumerism as:

"A social movement (under any system) where buyers seek to augment their rights and powers in relation to sellers." (emphasis ours)

The common feature of these definitions is the organized efforts of consumers, or identifiable consumer groups in any system to right perceived and/or actual wrongs. (Coppet 1974) The wrongs may have been committed by businesses in countries where the free enterprise system exists, or by government in countries where the government plays an active role in the economic system. Kotler's definition is broadest in that he interprets consumerism as a social movement where a group of people coalesce to accomplish a shared goal. Kotler's model provides a framework for examining and comparing consumerism in different countries. Kotler explains the social factors contributing to consumerism as a social movement. First, there must be present (1) Structural Conduciveness: an environment conducive to consumerism - an educated group of people, growth of income, certain problematic issues that require collective behavior. These factors induce greater expectations, which when unfulfilled produce (2) structural strains in the existing socioeconomic system. Theme structural strains contribute to the (3) generalized belief that business has not been responsive to society's expectations of performance. This general belief is then ignited by external factors that act as a catalyst or a (4) precipitating factor. Professional consumer spokespersons, politicians and the media (5) mobilize for action to solve the identified problems. Businesses usually act, but if their actions are perceived as inadequate, some form of legislation or (6) social controls result.

Hendon (1975) documents the fact that, historically, some manifestations of consumer discontentments have been recorded as social movements. Consumers have organized and sought redress at various times under different political systems. He cites the Grain riots (1775), Rebellion riots (1789), and Grocery riots (1792-93) in France as examples of organized protests based on consumer issues. In England the Grain riots (1736), Price control movement riots (1776), Garden riots (1780), Church and King riots (1790-92) and Rebecca riots (1839-42) also were based on consumer issues. In Poland the recent food riots were the result of consumers seeking redress for some basic dissatisfactions. In the United States the Boston Tea Party (1760), the Whiskey rebellion (1790), collective consumer movements of the 1900's and 1930's, and the more recent meat price agitations ware likewise based on consumer dissatisfactions. Hendon notes that until a nation is economically mature, consumer issues usually revolve over basic issues like food, clothing and shelter and tend to be violent. As the country develops, problems of consumption outweigh problems of production, consumer issues become more sophisticated and less violent. In the economically mature countries, consumer issues focus upon auto safety, nutritional labeling, advertising to children, wool products labeling, boat safety, Consumer Credit Protection and the like.

Gaedeke and Udo Aka (1974) queried diplomatic representatives of 58 nations on consumer concerns in their respective countries and seemed to confirm Hendon's theories. They found that the degree and focus of consumer concerns and consumer protection programs depended upon the level of industrial development of the country. As countries develop, consumer concerns and the need for protection assume increased meaning and importance and become vital elements in business and government policy.

In summary, it is safe to conclude that the above definitions of consumerism are typical and generally accepted. The consumer movement has always existed in some form throughout history in many areas of the world under a spectrum of political systems. The United States is not, and has not been, a leader in worldwide consumerism. Consumerism is a social movement dependent upon national economic conditions. Its progression in different countries can be analyzed using the Kotlerian framework. The economic maturity of a country dictates the sophistication of the topics involved, the violence of the movement, and future.

Brazil and Consumerism

Having discussed and explained consumerism, for the purposes of the article we will attempt to assess the status of consumerism in Brazil. First, a very short introduction to the country will be provided which highlights the importance of studying consumerism in Brazil.

Brazil has an estimated population of 120 million people; it is the most populous country in Latin America and has the seventh largest population in the world. The approximate annual growth rate of the population is 2.8%. Half the population is located in urban areas; approximately 35% reside in Brazil's eight largest cities. The 1979 GNP was approximately $200 billion.

Geographically a large country, Brazil has extremely rich mineral resources, particularly iron ore, manganese and semi precious gems. In addition, a new kind of bauxite was recently discovered in the Amazon region. Brazil's industry is quite strong, with exports of $10.1 billion in coffee, $2.2 billion in iron ore, and $1 billion in soybeans. With the aid of severe restrictions on imports, Brazil has generally maintained a fairly good balance of payments. Recently oil imports have posed a problem, but they are likely to be reduced by up to 20% when a new alcohol program is operationalized. This will hopefully result in a more favorable balance of payments position.

Foreign investment represents a small but important part of Brazil's capital base. Although the United States makes a significant portion (4.5 billion) of the approximately $10 billion of foreign investments, other countries such as Japan and Germany are increasing their capital commitments.

The world's financial institutions expect the continued growth and development of Brazil. Brazil is currently Latin America's largest borrower from international financial institutions, with $50 billion in commitments to commercial banks and other institutions such as the World Bank and International Monetary Fund. (Business Week 1978)

After examining its economic status, one can conclude that Brazil is one of the most important emerging countries. In addition, recent social changes make the study of consumerism in Brazil more attractive. Military control has been reduced and there is a movement towards a more democratic society. Secondly, improvements in education, and better dissimination of information through the mass media indicate that factors conducive to consumerism evolving into a broad social movement are present.

Application of the Model to Brazil

Using the framework developed by Kotler we can analyze consumerism in Brazil in greater detail. (See Figure l)

1.  Structural Conduciveness

Brazil has four structurally conducive characteristics that permit or create the potential for a consumer movement: a) advances in income and education; b) growth of technology; c) exploitation of the environment and d) disparities between the quality of local and exported products.

(a)  Income and Educational Advances.  Brazil, like other developing countries, has experienced a steady increase in per capita income each year, although the average income is still far below that of developed countries. One estimate of the per capita income of residence of the areas surrounding Rio de Janeiro is $556 per month (Pesquisa de commercio 1974), an estimate for similar areas of Sao Paulo is $350 per month. (Cunningham, Moore, Cunningham 1974) The average member of automobiles per family is estimated to be .72, although the average for families with at least one car is 1.32. (Pesquisa de commercio 1974) A 1974 study of Brazil indicated that 41.31 of the population of Sao Paulo could be classified as middle class. (Pesquisa de commercio 1974) Consumers visit shops frequently and spend considerable time shopping for food, clothing and appliances. The fact that should be stressed is the prominence of middle income consumers who now have the opportunity to buy goods and services. Furthermore, this growing middle class has higher levels of education. In Rio and Sao Paulo a majority of the residence have had at least secondary school education. This is particularly important since an educated middle class plays an important role in advancing consumerism due to its higher expectations. (Diamond, Ward and Farber 1976) When these expectations are not met, frustration usually results, setting the stage for consumerism.

(b)  Growth of Marketing Technology.  The sudden growth of imported technology, both in marketing and manufacturing, play an important role in creating social contradictions and strains. The problem of marketing technology, especially unwholesome marketing technology, is exemplified by the exposure of the Brazilian consumer to subtle marketing campaigns that could cause confusion for more sophisticated consumers. For example, consider pricing tactics in Brazil. Various pricing alternatives are offered to consumers in advertisements in Sunday newspapers in several large Brazilian cities. The main alternatives are: 1. the monthly payment price often stated without specifying the actual number of required payments. 2. the full price if payment is made at time of purchase (called a vista). 3. both the a vista price and the monthly payment price (both with and without the number of payments).

This type of pricing makes it virtually impossible to shop comparatively. Yet for many product categories, Brazilian shoppers use the newspaper as the primary source of information. When information was available to compare the monthly price of a product with the a vista price, the tine payment method was extremely costly, even after considering the effect of inflation. Confusing marketing strategies, shoddy products dominate the market system. Games, prizes, discounts, and other gimmicks cause additional misinformation to be communicated to the Brazilian consumer.

(c)  Exploitation of Environment.  The progressive exploitation of the environment is a factor that has special significance in Brazil. Many Brazilian cities are situated in areas of magnificent natural beauty, but the development of business and urban housing has been accomplished with utter disregard for the ecological balance. Copacabana in Rio de Janeiro is a classic example of this situation.

Pollution is yet another problem. Many of the largest Brazilian cities have pollution levels that are far worse than those that resulted in consumer and governmental action in comparable American cities. In a recent public opinion poll of the 11 million inhabitants of the Greater Sao Paulo, area, residents indicated that their major concern was air pollution. (Brazil Herald 1977) Brazilians are proud of their cities and their beaches, and the decay of both has aroused many residents.

(d)  Quality of Local versus Exported Products.  A factor unique to developing countries contributes to social contradictions: the quality difference between products produced for local consumption and those produced for export. In Brazil the finest coffee and leather is exported and not available for local consumption. One Brazilian automobile (PUMA) has 50 safety options that are available only on the exported model. (Ribeiro 1974) In essence, export products are of higher quality and have better features than those produced for domestic consumption. These inconsistencies and limitations become a major impetus for change.

In summarizing this section, one can conclude that the presence of an educated population, a prominent new middle class demanding quality goods and services, and the increasing exploitation of the environment, form the basic elements for consumerism and that the potential for consumer action exists.

2.  Structural Strains

The existence of the above elements lead to social contradictions resulting in conflicting attitudes and deteriorating relations between consumers, businesses and government. These conflicting attitudes and relations in turn produce structural strains among parts of the socioeconomic system causing frustration and discontentment.

Economic discontentment is very real in Brazil and other developing countries. Inflation, cited as a structural strain in the United Stutter is a major economic problem in Brazil. Average monthly inflation is estimated to be about 6 1/2% unadjusted or about 78% in 1979. Consumers are aware that their salaries do not rise at the same rapid rate. There is pressure on consumers to spend all their income, because attempts at saving are futile due to inflation.

Political discontentment is a major problem in Brazil. Unlike other developing countries, Brazil has a stable government, but it is a military government. There is much discussion about returning the government to a true democracy, and some steps have been taken in that direction this past year. However, the interaction between the military and the population appears to be a special strain, although the military is not without internal discontent-merit. The labor movement has claimed the right to strike and the middle class is increasingly discontented with the country's economic institutions and unresponsive bureaucracies.

The first two antecedent conditions for the growth of consumerism structural conduciveness and strains are evident in Brazil. If there were all that were needed for consumerism, one would expect that Brazil would soon have a very active and vocal consumer movement. Yet a consumer movement has not appeared. The last four conditions appear to be acting as restraining influences. Of course, the question of the degree of development required before the conditions can coalesce is subjective. Recent social changes and the authors' personal experience this past year suggest that the other components of the change model are emerging in importance.

3.  Generalized Belief

The existence of stress leads to the proliferation of certain consumer beliefs. As a social movement consumerism cannot develop unless there is a generalized belief about problem in the marketplace. This generalized belief, however, is not well developed in Brazil. ANDEC (Associates National de Defense do Consumidor) is trying to create this rareness and generalized belief, however it has a limited budget and staff. Several legislators have an interest in the consumer's cause, but they lack clout. Nina Ribeiro, Depuato Federal, addressed the congress on the plight of the Brazilian Consumer as early as 1971. He has a regular TV show on consumer problems in Rio. Ualo Neto, a former biology teacher is now head of the environmental protection division in the Ministry of Interior, and is active in environmental protection.

In general, it appears these efforts have made only a slight impression on Brazilian consumers. There are two major reasons for this problem. First, the press in Brazil is not absolutely free. It does little to communicate consumer beliefs. Second, there is a predominance of fatalism among Brazilians as with the members of most underdeveloped countries. (Neilson and Stanton 1972) Although Brazil is now emerging from its underdeveloped economic state, its culture, attitudes, values and other social characteristics are slower to change. Social-psychological changes take longer then economic changes and require that consumers perceive their attempts at change will be ultimately successful. If consumer confidence does not exist, a generalized belief about problems and solutions will not develop.

The consumer movement is less likely to flourish without generalized consumer beliefs. Consumerism needs sustained consumer or general population support. In Brazil although these conditions are presently not readily apparent, a basic structure is developing that would make the maturing of the remaining conditions faster than would be expected. Inflation and other economic pressures are growing, it is likely that consumerism will soon become familiar to Brazilians. Some of the impetus, of course, will hinge on the future actions of the Brazilian government.

4.  Precipitating Factors

The existence of a common belief is a necessary condition for a social movement to evolve. However, a catalyst is needed to precipitate the movement. Catalysts or precipitating factors are usually specific events or major problems that spark the growth of the social movement, in this case, consumerism.

Precipitating factors can develop quickly and without warning. For example, in the United States Ralph Nader was a lawyer and unknown freelance writer in 1964; one year later he was the author of the well-known book Unsafe at any Speed and ignited the consumer movement. (McCarry 1973) A Brazilian could just as quickly come to the forefront of consumerism in Brazil. A major roadblock to any precipitating factor emerging is the National Security Laws of Brazil. When liberally interpreted, it prohibits all actions perceived as contrary to the interests of the government. If the government does not create an environ-meat that is conducive to consumerism, its genesis will be slow, and probably violent.

This condition should not be viewed too pessimistically, however. For example, the existence of similar laws in Poland did not hinder consumers from rioting over high food prices. Further sharp rises in prices or any other problem in the Brazilian economic environment may become the spark necessary to precipitate a consumer movement. Another catalyst might be the natural environment. With increasing urbanization, groups are forming to address environmental issues. Although one may question whether "all" sides believe this issue is important, progress on raising the level of the population's awareness of this issue is evident.

5.  Mobilization for Action

The success of a consumer movement ultimately depends upon how effectively it is organized and managed. This can be accomplished either by a single dynamic individual or groups of individuals. Working links are usually established with people in universities and other professions to acquire technical expertise and credibility. Politicians, prestige seekers and other groups coalesce and the movement is born.

In Brazil, although still smal1, special purpose consumer groups are beginning to form. A group in Sao Paulo organized a Walk-a-thon to focus attention on pollution within the city. Residents in Rio made an overnight trip (in a caravan of forty cars and buses) to the neighboring state of Espirito Santo to protest government attempts to convert a world-famous biological reserve into a commercial palm plantation. Other residents in Rio have blocked construction of high rise apartments around one of the city's most beautiful parks. Residents of Sao Paulo also battled the city over plans to build a paper factory at the headwaters of what is said to be the state's last unpolluted river. Although these are at most rudimentary beginnings, they indicate the genesis of a structure that could support rapid growth if encouraged. A few politicians are now campaigning on consumer issues, as consumer awareness develops, more and more politicians will use this strategy. Consumerism is a non-political social issue that lends itself well to the "bandwagon" effect and will in all likelihood draw followers in the times ahead.

Another element for mobilization is the mass media. In Brazil (as in other developing countries), there is censorship of the media. Although censorship is usually not directed at issues like consumerism, it can often be capricious, thereby restraining the media from controversial issues in general. Lack of wide media coverage has to a certain extent stifled the organization of a consumer movement in Brazil, but with the return of certain freedoms under the new government there could be better mobilization for action.

6.  Social Control

The progression of the consumer movement in a country will ultimately depend upon the reaction of business and government leaders. Countervailing forces must be considered in assessing the progress and course of consumer movements. If business or government leaders fail to respond appropriately, consumer activists are encouraged. In the United States, legislators and the business community mostly ignored the early signs of growing consumerism. This response created greater frustration and resulted in an even more organized and concerted consumer effort.

It is too early to determine how the Brazilian domestic and multinational business community will respond to the activities of consumerists. The government appears to be trying to participate in the process, but like all bureaucratic bodies it moves slowly. Still, increasing budgets, new departments, and so forth indicate that the government is not ignoring the potential consumer movement. It is also possible that the domestic business community may learn from the mistakes of developed countries and react more quickly to protests and complaints, although this appears improbable. Multinational corporations in Brazil could play a more active role in determining future consumer needs and rights rather than reject proposals for change. They can listen to "reasonable" proposals and act jointly with the government as influential change agents, and thus negate the need for overly stringent legislation. Certain industries, like the Brazilian advertising industry, are developing codes and procedures that are attempting to provide consumer protection from fraudulent and misleading advertising. This is an initiative taken by the industry because it feels it has professional expertise that policy makers lack.

Summary and Implications

When the previously discussed conditions were present in the United States in the 1960's, the consumer movement advanced to where it was recognized and accepted as a part of the American society. In developing countries like Brazil, consumerism appears to be in an infant stage. But, as can be seen in this article, many of the antecedent conditions that gave rise to the American movement are present in Brazil. The emergence of a generalized belief and certain precipitating factors could activate the dormant movement. It only took approximately 15 years for consumerism to become a household expression in America. The United States, however, was at a much higher level of economic development than Brazil at the time.

It is difficult to predict when or how quickly the movement will flourish in Brazil or other developing countries. A great deal depends upon the government's role in the process. The significance of the government's position has both positive and negative potential implications. The government of developing countries have traditionally played active roles in stimulating public sectors of the economies to grow faster than would be expected in free market situations. It appears that Brazil's government will continue to play a major role in the country's economic development. For example, Brazil's Minister of Finance, Henique Simonsen has said he prefers a hybrid economic system to minimize the imperfections of both free markets and planned economies. He believes that it is not a question of finding out which works better under ideal conditions but which makes the fewer mistakes under normal conditions. (Simonsen 1977) The government in Brazil has not played an active role so far.

Likewise, until the government realizes that consumerism is an expected and important adjunct to economic development, it will not encourage the business sector to support the consumer movement or introduce the legislation to force compliance. For that reason, it will be important for the newly formed consumer groups to demonstrate to government officials that in the long run the effect of the consumer movement is to provide better, safer and more efficient products and thus stimulate economic growth rather than hinder it.

Two situations illustrate this point. Used car dealers are required by law to disclose all defects and potential problems to the buyer. The effect of this law was lower car prices, since in general prices were higher when defects could be "forgotten." It was estimated that the savings to the consumers of one state was $40 million in one year. These savings are now available to the consumers to either save, which encourages investment, or spend. (Anderson and Whitten 1977)

In Brazil new legislation, although still unclear, is being considered to force retailers to give both the a vista price and the monthly price with the number of payments. The impact on consumers might be to encourage comparative shopping. Monthly payments might still be selected due to lack of funds or credit availability but the purchase decision will be based on accurate and comprehensible information. Consumers who select the a vista price will have additional monies to spend on other items rather than on interest.

Consumerism is inevitable in developing countries, as conditions conducive to its development emerge. The direction of consumerism in Brazil is yet to be determined and its leadership is still unclear. The multinational community can and should engage in a more positive role with the governments of developing countries in future consumer issues. Rather than maintaining a passive or reactive stance, the multinational firms can utilize their experiences in developed countries to shape consumer programs in developing nations that reflect their interests. This should not be thought of as an attempt to subvert the consumer movement, only to suggest that the mutual interests of both groups may be more closely attained if they share a joint role in establishing policy.

FIGURE I

FACTORS LEADING TO THE RISE OF CONSUMERISM IN BRAZIL

REFERENCES

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