Many local businesses are effectively ripping off consumers surreptitiously or even blatantly, which is a manifestation of weak consumerism and poor regulation. These businesses do not realize that building goodwill can actually generate more market patronage and bigger returns.
When a wrong refund turns right? A US retail chain once had a customer complaining about a defective product and wanting a refund. After the customer had an argument with a sales clerk, the manager approved without question the product return and refund.
The clerk, however, protested: “Boss, why refund something which is not even ours.” The manager replied, “I know, but this is our chance to sell thousands of times more.” True enough, the customer realized later he bought the defective item elsewhere, and since then became a loyal customer.
This incident became a powerful marketing tool, but the company did not use it aggressively in its ad-marketing, lest it be accused as capitalizing on shortcomings of customers and profiting from it. Nonetheless, it created the goodwill and word of mouth. Since then, many marketing gimmicks of companies were tried, many firms were giving freebies as marketing tools. Service providers offer 30-day free trials, which are easier to do without cash-outs and inventory movement.
Weak consumer power? Locally, some industries are dominated by monopolies, duopolies and oligopolies, whereby consumers are at their mercy with fewer choices.
The only power the consumer has is his decision to buy or not to buy, but this power is weak when you have low income. Sadly, this weak purchasing power has been further eroded by three factors:
One, inflation erodes it fast as consumers buy less goods and services for the same peso of income.
Second, consumers are bombarded with advertisements influencing their decisions to buy unnecessary stuff, leaving them with less savings for investments.
Last, producer-sellers under oligopolies make more choices than consumers. They dictate when to produce, where to produce, what volume to produce and at what price they sell their products.
Greed over grid? At the national level, oligopolies are more decent and sophisticated, but more effective and deceiving as they influence policies and have the resources for PR, advertising and marketing.
One case is Meralco’s “Bill Deposit,” or the average monthly value in power consumption per household that is slapped on the electric bills affecting 5.5 million household consumers. Meralco argues this is “allowed by law,” claiming it’s similar to rental advances/deposits charged on rented property. However, what is “legal” is not necessarily moral. This “legality” is also debatable.
As tenants are protected by law from abrupt unilateral evictions, landowners have secured themselves ahead with rental advances and deposits. Meralco does not need advanced deposits as they cut off power on delinquent payers, who immediately settle and reconnect as they need power. Thus, the bill deposit is unnecessary.
United Filipino Consumers and Commuters (UFCC), headed by RJ Javellana, called on President Duterte to stop “Meralco’s deposit” and refund consumers, claiming Meralco is profiting illegally and exploiting hapless and helpless consumers.
It claims the deposit is an unnecessary “double billing” on consumers. It added that Meralco already charged consumers returns on their working capital and bad debts on delinquent customers. Penalties and other charges were already collected. In 2013 alone, Meralco charged P693 million for bad debts and P1.156 billion for working capital, it added.
UFCC estimates that although the deposits are eventually returned, they earn meager interests of 0.250 percent per annum or P650 million for consumers, while Meralco earns 10.8 percent to 13 percent, or P2.6 billion to P3.3 billion from deposits at P26 billion. Whether the data are accurate or not, is it a case of greed over the power grid?
Disadvantage card? Another case is one giant mall chain’s “Advantage Card” sold at P150 each and promoted to generate reward point benefits. For every P400 of purchases, one earns a point equivalent to P1. This means, one needs to purchase a total of P60,000 to recover one’s investments of P150 for the card.
The Pareto Principle states 80 percent of ordinary cardholding customers will find difficulty purchasing P60,000 in one year. Even if the card expires in two years, the retail chain makes use of his money from day one, while the customer neither gets interest earnings.
If I’m not mistaken the sister company operating the card spent initially P50 million on a PR-advertising campaign, but generated P350 million in one year, or a 600-percent return on investment. Although the retail chain conveniently argues its “caveat emptor” excuse, which means “let the consumer beware,” perhaps the government must regulate excesses to reverse consumer disadvantages.
“Robbery” on the air waves. Another form of institutionalized robbery are the telco e-loads that are abruptly cut off even if not fully consumed depending on programmed periods (daily, weekly, monthly).
Theft happens when somebody steals from you without your knowledge; qualified theft is when the thief is the one entrusted with the same asset stolen; while robbery is forcible stealing. Can we consider the abrupt forcible cancellation of e-loads a form of robbery with consent, an oxymoron of sorts? Consumers are helpless owing to the clout of the telco duopoly, thus the need for government regulation.
Why you can’t bank on banks. Banks are no exception as they, too, practice an institutionalized form of “inside bank robbery.” They forcibly deduct as much as P350 per month for bank accounts below “maintaining balances,” a policy affecting 80 percent of depositors.
A P350 monthly deduction for a minimum P2,000 maintaining balance is about 17.5 percent of P2,000, or 210 percent if annualized for 12 months. Another P350 is deducted every month thereafter until the balance hits P250 on the sixth month, and closed on the seventh month.
The next P350 deduction on the second month is a penalty equivalent to 21.21 percent, or 254.54 percent per annum. Subsequently, penalties are equivalent to 323.07 percent on the third month, 442.1 percent on the fourth, 700 percent on the fifth, and 1,689 percent on the sixth, thus making the banks more usurious than informal lenders.
E-mail: mikealunan@yahoo.com