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Consumer behavior in economics of shortage
J BUSN RES 1992:24:5-10
5
Consumer Behavior in Economics of Shortage Stanislaw Gajewski University of Eddi
This article presents some specific forms of consumer behaviors in the economic crisis in Poland. They will be analyzed through 3 main phases: (1) the phase of the shaping of needs; (2) the phase of market behaviors; and (3) the phase of consumption of goods and services. The impact of consumer behaviors on the behavior of enterprises will be also shown. Introduction For an effective marketing policy to be realized, it is necessary to be acquainted with the principles and rules of behavior of people engaged in various spheres of consumption activity. Such knowledge consists primarily of information about consumer’s behavior in different conditions of the environment, and factors leading to definite decisions. For many years, these problems have been of interest for economists dealing with both the problems of marketing and the various aspects of consumption. Expression of these problems is in the form of numerous works aimed at discovering causalities governing consumers’ behavior, and especially those concerning the mechanism of purchasing, making decisions, and performing acts of choice for products. Many of these conceptions have been formalized in definite theoretical models, which find, however, their quite common application in practice. Nonetheless, it must be underlined that many theoretical generalizations elaborated by the Western economists are inadequate to the situation prevailing in the real socialist countries. That was pointed out by Kornai (1980), who formulated some generalizations concerning consumers’ behaviors within his theory of the microeconomics of shortage. The views contained in his work are, however, rather general and as such, they may constitute only a point of departure for further studies and empirical verification. The necessity of undertaking such studies refers especially to the Polish situation, which can be characterized not only as the economics of shortage but also as the situation of a protracted and deep economic, social, and political crisis. Considerable shortages in the supply of consumer goods, high rates of inflation, different forms of rationing, and a drop in real incomes, exert a very strong influence, both
Address correspondence 41, W-214 Mdi. Poland.
to: Stanislaw
Journal of Business Research 24, 5-10 (1992) 0 1992 Elsevier Science Publishing Co., Inc. 655 Avenue of the Americas, New York. NY 10010
Gajewski.
Institute
of Marketing.
University
of t6di.
Rewolucji
1905 r.
014X-2963/92/$3.50
6
J BUN RES 1992:24:5-10
S. Gajewski
on the shape of consumption and a consumer’s behavior in the process of satisfying his needs. Economies of shortage clearly make it necessary to adopt different research assumptions with regard to a consumer’s environment. As it is known, in the economically developed market-oriented countries there is an accepted assumption about the existence of market equilibrium, and its implication is a statement that consumers’ preferences constitute a basis for the shaping of production and allocation of resources (at least within a short period of time). In economies of shortage, the most general assumptions concerning a consumer’s environment could be formulated in the following ways: l
The seller’s market
l
Market
l
l
l
l
regulation
predominates has a limited
in the case of most goods and services. scope,
Markets are, moreover, deformed lations, and especially of different
even in relation
to households.
by parallel existence of nonmarket reguforms of the administrative distribution.
In the case of the market for goods and services for which demand is satisfied and the administrative distribution eliminated, consumers’ behavior is distorted by unsatisfied demand on other markets (phenomenon of demand “overspill”). Poor supply limits, to a very high extent, a consumer’s freedom of choice, in this way a possibility of expressing his real needs and preferences. As a result of all this, a consumer’s sovereignty it exists only to a very limited extent.
practically
and
does not exist or
Characteristic conditions of the environment in economies of shortage generate, in turn, quite specific reactions and patterns of consumers’ behaviors. These specific reactions and patterns can be observed during each phase of consumers’ behaviors: (1) in the phase of the shaping of needs; (2) in the phase of making purchases (market behaviors); and (3) in the phase of using goods and services (consumption phase).
Shaping
of Needs
and
Aspirations
When speaking about needs, it should be noted that one of the main dogmas of our system is the assertion that the basic goal of the socialist economy is the stimulation of the needs and aspirations of individuals, and social groups, and maximum satisfaction of these needs, both material and cultural. There is no doubt that the socialist system in Poland has verified itself only in the former aspect so far. Consequently, a huge and deepening gap between needs and the possibilities of their satisfaction has appeared. Unsatisfied needs have been displaying an upward trend for many years. This includes a vast majority of the society, but mainly the young generation, which does not see any possibilities of attaining decent material standards (especially with regard to housing) in the foreseeable future. A characteristic tendency observed in Poland in recent years, in the phase of the shaping of needs, is a market materialization of goals of households (Diet1 and Gajewski, 1988; Beskid et al., 1984). As a direct effect of the crisis, people threatened in the economic foundations of their existence turn to material values of an
Consumer
Behavior
in Economics of Shortage
J BUSN RES 1992:24:5-10
7
increasingly bigger degree. These values outpace other life goals and aspirations connected with family, good health, leisure, etc. The saddest reflections are aroused by the fact that among socially appreciated values, quite a distance is placed between 2 interrelated elements, professional work and education. Although its scope is quite differentiated, a reduction of needs has encompassed to the highest degree the realization of needs connected with a flat and its equipment, recreation and tourism, and cultural entertainments (Gajewski, 1987). Resignation from satisfying the most elementary need, such as food, is relatively insignificant. This points to the fact that food is a strongly protected need that is protected at the cost of satisfying other needs. With regard to consumers’ behaviors in the sphere of food consumption in Poland, we can even observe some characteristics of Giffen’s paradox. It is expressed in an intensified demand for food (despite its growing prices) and resignation from purchases on non-food items. As a result, the remaining needs (considered to be needs of higher order) are satisfied in further order, and in conditions of the crisis-they are drastically reduced. A lower degree of satisfying most needs does not mean, of course, that consumers have entirely given up their aspirations to realize them, because aspirationsalthough dependent, to a large degree, on real living conditions-do not undergo any major transformations. It is, among other things, an outcome of a strong trend observed in Poland to imitate the consumption patterns of the highly developed Western countries, often without any dose of criticism. The situation results ultimately in an emergence of a gap, in many spheres of consumption, between some “taught consumption norms” transferred from more affluent societies, and the living standards made possible by the economy. The crisis conditions intensify a characteristic process consisting of unification of the ways in which consumption needs are satisfied, and as a result, considerable standarization of life styles adopted by various social groups. It is a phenomenon seldom met in the civilized world in contemporary times, and the next proof of pauperization of the Polish society, whose level and structure of consumption may be characterized as dominance of needs over wants.
Changes
in Market
Behaviors
Consumers’ behavior in the market in the crisis situation demonstrates a definite logic, whose observation is hampered by the existing conditions of the environment. Specific characteristics of these conditions include, first of all, high rates of inflation, declining levels of real incomes, and very restricted accessibility of products. The main effect of inflation, which is a combination of price inflation (overt) and supply inflation, is the fact that both real and expected price increases become a crucial element in the behavior adopted by households. Generally speaking, consumers become more pessimistic with regard to the country’s economy and expect both a further growth of prices, and greater shortages. That is why they are ready to accept higher prices and are inclined to expand more time and energy to obtain and hoard products. Increased distrust of the purchasing power of money mainly intensifies the propensity to consume and decreases the propensity to save, which results in getting rid of savings accumulated earlier on. Propensity to save money for specific purposes
8
J BUSN RES 1992:24:5-10
S. Gajewski
decreases especially fast because prices of consumer goods, being an object of aspirations, are so high that their purchasing goes beyond a decision-making horizon of an average household. This natural, and understandable, reaction of households is very strongly counteracted, in turn, by another factor, the so-called forced savings, understood to mean an unexpected part of current incomes due to market shortages. This situation ultimately weakens the impact of the rationality motive, resulting in excessive hoarding of goods in case they disappear from the market and strengthening a habit of buying goods to store them or “just in case they may be needed.” This means that consumers are guided in their purchasing decisions not by a need really existing, but by their preoccupation with safeguarding themselves to satisfy their future needs. As a result, consumers frequently purchase goods and services that are quite distant substitutes of products they would actually wish to buy. In many cases the “substitute” is alcohol. Forced substitution is accompanied by forced expenditure because, harassed by shortages and fear of further price rises, a consumer buys a product not when he needs it, but when it is available. The availability of products in conditions of shortage is limited not only by monetary factors (prices and incomes) but also by legal-administrative barriers to purchasing some goods and services (various forms of rationing), barriers connected with time earmarked for shopping, and barriers connected with vital strength, life energy, abilities, and even cleverness of particular individuals. As a result of market shortages and institutional constraints on freedom of choice, purchasing decisions are quite simplified, but the process of purchasing is complicated and elongated. The purchasing of many, oftentime basic, items not only involves loss of time but also is done at the cost of excessive exertion and humiliation connected with shopping. The last element results, first of all, from carelessness and rudeness of shop assistants, whose superior position makes consumers realize that they are at the mercy of those who serve them. In such a situation, acquiring the means of consumption goes beyond the institutional market and often takes place on the black market, intensifying the phenomena of bribery and speculation. Operation of the black market is favored by the fact that a large part of households strive by all means to get rid of devaluating zloties, buying many items at speculative prices, which increases their deficit on the market. Some goods, especially durables, are purchased not because of their utility values, but because their possession becomes a peculiar investment of savings and protection against inflation. Ultimately, in consumers’ awareness there is a growing fascination with items, for which the more difficult it is to acquire them, the more they are appreciated.
Changes
in Level
and
Structure
of Consumption
Because of shortages of many basic products and soaring prices, all causalities governing changes in the structure of consumption in “normal” conditions collapse. First of all, spending on food, tobacco, and alcohol tends to increase relative to the cost of consumption of non-food items, along with a sharp drop in the share of services in the population’s spending. The structure of food consumption also undergoes changes. An increasingly bigger role is played by products of little value from the physiological point of view such as bread, cereals, or potatoes, whereas
Consumer
Behavior in Economics of Shortage
J BUSN RES 1992:24:5-10
9
the share of meat, some fats, and vegetables and fruit (especially citrus fruit) decreases. The role of processed food in households’ consumption is diminished as well. Another characteristic feature of consumers’ behaviors, which gains an enhanced importance at the time of crisis, is the process of consumption renaturalization, a reversal of the normal development processes. This phenomenon finds its expression in increased inputs of one’s own labor for running and maintaining households and resignation from purchasing market services. The services meant here are particularly cosmetic and hairdressing services, repairs and renovations of flats, laundry washing, and different types of repairs. It appears to be very easy to resign from catering services. Consequently, their share in total households’ expenditure amounts to a fraction of 1% . Self-service becomes increasingly more common, especially among economically weaker households, which perceive it as the only possibility of strengthening the family budget. It should be remembered, however, that decisions about performing various jobs within a household involve outlays of work within a household at the cost of free time and rest, which produces negative social effects such as lowering professional activity, drop in labor productivity, etc. The above-mentioned renaturalization of consumption is the next symptom of defensive reactions. It constitutes a sad necessity for most households caused by a considerable drop in real incomes. A situation, due to insufficient supply and relatively low quality of production, also produces a disturbing phenomenon of extending the time during which possessed durable goods are exploited. Extended exploitation encompasses not only worn out appliances but also those whose further exploitation should be abandoned for safety reasons (e.g., automobiles exploited sometimes for 25 years and more). The above tendencies existing in Poland, a result of market determinants, are an expression of unfavorable changes in the structure of consumption and negation of causalities observed in the more developed countries. Simultaneously, the deepening market disequilibrium and a further deterioration of living standards do not justify expectations of tendencies connected with modernization of consumption.
Implications
for Activity
of Enterprises
Changes in consumers’ behaviors, both on market and outside it, must have their influence on the activity of industrial and trade enterprises. It would be difficult to draw, however, an explicit conclusion from this fact, indicating that a household as a subject of demand performs a steering function in relation to subjects of supply, and thus through its preferences, expressed on the market, it exerts an influence on the level and structure of production and supply. It seems that in the situation of market disequilibrium and the centralized system of management, the main emphasis in the activity of enterprises is laid on their adaptation to specific conditions of the environment, with consumer needs and preferences constituting only one possible point of reference. Moreover, in such a situation, enterprises develop definite rules of behavior that very often lead to conflicts among particular participants of the market. The conflict situation finds itself expressed in the fact that realization of goals by one of the subjects is usually accompanied by inability to accomplish the goal by other subjects, especially households.
10
J BUSN RES 1992:24:5-10
S. Gajewski
From the formal point of view, enterprises, as a subject of supply, are an equal partner in relation to households. However, in the situation of a deep market disequilibrium and a frequent monopolistic position, they hold a position of a much economically and organizationally stronger partner in relation to households, dictating their terms to households. A substantial surplus of demand over supply suggests, first of all, that enterprises do not encounter in principle any sales barrier. Moreover, since there are mainly buyers competing with one another, enterprises do not have any difficulties in obtaining high prices for their products either. For this reason they are not interested in conducting extensive market research, utilizing its results in their activity. Such an attitude is promoted also by relatively restricted autonomy of enterprises and a narrow scope of the functioning of market mechanisms in the economy. Due to the fact that practically every product, even of a very low quality, will be accepted by consumers, enterprises display little interest in developing and putting new products on the market. They are characterized by innovation indifference, which does not require any activities connected with product development. In these conditions, much more attention is devoted to the organization of material procurement and production processes, whereas manipulation of the market is often limited to raising prices. The situation in which enterprises are oriented mainly at production determined more by technical-balance possibilities than households’ needs, generates numerous negative socioeconomic phenomena, including ineffective use of raw materials, materials, capital stock, human factor, etc. However, one of the most serious repercussions of this situation is manifestation of the negative feelings of consumers. Harassed by inflation, permanent shortages, and an inability to realize stimulated needs, consumers not only express their dissatisfaction and frustration, but first of all advance claims concerning growth of wages and social benefits. It must be admitted that these claims are often accepted in the present conditions. In this way, households express their subjectivity and realize their steering function in relation to trade enterprises, and producers of consumer goods and services. At the same time, it is the main, and often the only, aspect of consumers’ behavior reckoned with in the activity of enterprises.
References Beskid, Lidia, et al., Living Conditions and Needs of the Polish Society, Polish Academy of Sciences, Warsaw. 1984. p. 17 (in Polish). Dietl, Jerzy, and Gajewski, Stanislaw, Determinants of Consumer Behaviours in Economics of Shortage, typescript, Department of Marketing, University of Lodz, Lodz. 1988. p. 69 (in Polish). Gajewski,
Stanislaw,
Hierarchy and Intensity of Consumer Needs of Households,
versitatis Lodziensis, Lodz. 1987. p. 101 (in Polish). Kornai, Janos, Economics of Shortage. North Holland Publishing
Company,
Acta Uni-
Amsterdam.
1980. Palaszewska-Reindl,
Teresa,
Polish Households.
saw. 1986, p. 208 (in Polish).
Everyday Life during Crisis, IWZZ,
War-
5
Consumer Behavior in Economics of Shortage Stanislaw Gajewski University of Eddi
This article presents some specific forms of consumer behaviors in the economic crisis in Poland. They will be analyzed through 3 main phases: (1) the phase of the shaping of needs; (2) the phase of market behaviors; and (3) the phase of consumption of goods and services. The impact of consumer behaviors on the behavior of enterprises will be also shown. Introduction For an effective marketing policy to be realized, it is necessary to be acquainted with the principles and rules of behavior of people engaged in various spheres of consumption activity. Such knowledge consists primarily of information about consumer’s behavior in different conditions of the environment, and factors leading to definite decisions. For many years, these problems have been of interest for economists dealing with both the problems of marketing and the various aspects of consumption. Expression of these problems is in the form of numerous works aimed at discovering causalities governing consumers’ behavior, and especially those concerning the mechanism of purchasing, making decisions, and performing acts of choice for products. Many of these conceptions have been formalized in definite theoretical models, which find, however, their quite common application in practice. Nonetheless, it must be underlined that many theoretical generalizations elaborated by the Western economists are inadequate to the situation prevailing in the real socialist countries. That was pointed out by Kornai (1980), who formulated some generalizations concerning consumers’ behaviors within his theory of the microeconomics of shortage. The views contained in his work are, however, rather general and as such, they may constitute only a point of departure for further studies and empirical verification. The necessity of undertaking such studies refers especially to the Polish situation, which can be characterized not only as the economics of shortage but also as the situation of a protracted and deep economic, social, and political crisis. Considerable shortages in the supply of consumer goods, high rates of inflation, different forms of rationing, and a drop in real incomes, exert a very strong influence, both
Address correspondence 41, W-214 Mdi. Poland.
to: Stanislaw
Journal of Business Research 24, 5-10 (1992) 0 1992 Elsevier Science Publishing Co., Inc. 655 Avenue of the Americas, New York. NY 10010
Gajewski.
Institute
of Marketing.
University
of t6di.
Rewolucji
1905 r.
014X-2963/92/$3.50
6
J BUN RES 1992:24:5-10
S. Gajewski
on the shape of consumption and a consumer’s behavior in the process of satisfying his needs. Economies of shortage clearly make it necessary to adopt different research assumptions with regard to a consumer’s environment. As it is known, in the economically developed market-oriented countries there is an accepted assumption about the existence of market equilibrium, and its implication is a statement that consumers’ preferences constitute a basis for the shaping of production and allocation of resources (at least within a short period of time). In economies of shortage, the most general assumptions concerning a consumer’s environment could be formulated in the following ways: l
The seller’s market
l
Market
l
l
l
l
regulation
predominates has a limited
in the case of most goods and services. scope,
Markets are, moreover, deformed lations, and especially of different
even in relation
to households.
by parallel existence of nonmarket reguforms of the administrative distribution.
In the case of the market for goods and services for which demand is satisfied and the administrative distribution eliminated, consumers’ behavior is distorted by unsatisfied demand on other markets (phenomenon of demand “overspill”). Poor supply limits, to a very high extent, a consumer’s freedom of choice, in this way a possibility of expressing his real needs and preferences. As a result of all this, a consumer’s sovereignty it exists only to a very limited extent.
practically
and
does not exist or
Characteristic conditions of the environment in economies of shortage generate, in turn, quite specific reactions and patterns of consumers’ behaviors. These specific reactions and patterns can be observed during each phase of consumers’ behaviors: (1) in the phase of the shaping of needs; (2) in the phase of making purchases (market behaviors); and (3) in the phase of using goods and services (consumption phase).
Shaping
of Needs
and
Aspirations
When speaking about needs, it should be noted that one of the main dogmas of our system is the assertion that the basic goal of the socialist economy is the stimulation of the needs and aspirations of individuals, and social groups, and maximum satisfaction of these needs, both material and cultural. There is no doubt that the socialist system in Poland has verified itself only in the former aspect so far. Consequently, a huge and deepening gap between needs and the possibilities of their satisfaction has appeared. Unsatisfied needs have been displaying an upward trend for many years. This includes a vast majority of the society, but mainly the young generation, which does not see any possibilities of attaining decent material standards (especially with regard to housing) in the foreseeable future. A characteristic tendency observed in Poland in recent years, in the phase of the shaping of needs, is a market materialization of goals of households (Diet1 and Gajewski, 1988; Beskid et al., 1984). As a direct effect of the crisis, people threatened in the economic foundations of their existence turn to material values of an
Consumer
Behavior
in Economics of Shortage
J BUSN RES 1992:24:5-10
7
increasingly bigger degree. These values outpace other life goals and aspirations connected with family, good health, leisure, etc. The saddest reflections are aroused by the fact that among socially appreciated values, quite a distance is placed between 2 interrelated elements, professional work and education. Although its scope is quite differentiated, a reduction of needs has encompassed to the highest degree the realization of needs connected with a flat and its equipment, recreation and tourism, and cultural entertainments (Gajewski, 1987). Resignation from satisfying the most elementary need, such as food, is relatively insignificant. This points to the fact that food is a strongly protected need that is protected at the cost of satisfying other needs. With regard to consumers’ behaviors in the sphere of food consumption in Poland, we can even observe some characteristics of Giffen’s paradox. It is expressed in an intensified demand for food (despite its growing prices) and resignation from purchases on non-food items. As a result, the remaining needs (considered to be needs of higher order) are satisfied in further order, and in conditions of the crisis-they are drastically reduced. A lower degree of satisfying most needs does not mean, of course, that consumers have entirely given up their aspirations to realize them, because aspirationsalthough dependent, to a large degree, on real living conditions-do not undergo any major transformations. It is, among other things, an outcome of a strong trend observed in Poland to imitate the consumption patterns of the highly developed Western countries, often without any dose of criticism. The situation results ultimately in an emergence of a gap, in many spheres of consumption, between some “taught consumption norms” transferred from more affluent societies, and the living standards made possible by the economy. The crisis conditions intensify a characteristic process consisting of unification of the ways in which consumption needs are satisfied, and as a result, considerable standarization of life styles adopted by various social groups. It is a phenomenon seldom met in the civilized world in contemporary times, and the next proof of pauperization of the Polish society, whose level and structure of consumption may be characterized as dominance of needs over wants.
Changes
in Market
Behaviors
Consumers’ behavior in the market in the crisis situation demonstrates a definite logic, whose observation is hampered by the existing conditions of the environment. Specific characteristics of these conditions include, first of all, high rates of inflation, declining levels of real incomes, and very restricted accessibility of products. The main effect of inflation, which is a combination of price inflation (overt) and supply inflation, is the fact that both real and expected price increases become a crucial element in the behavior adopted by households. Generally speaking, consumers become more pessimistic with regard to the country’s economy and expect both a further growth of prices, and greater shortages. That is why they are ready to accept higher prices and are inclined to expand more time and energy to obtain and hoard products. Increased distrust of the purchasing power of money mainly intensifies the propensity to consume and decreases the propensity to save, which results in getting rid of savings accumulated earlier on. Propensity to save money for specific purposes
8
J BUSN RES 1992:24:5-10
S. Gajewski
decreases especially fast because prices of consumer goods, being an object of aspirations, are so high that their purchasing goes beyond a decision-making horizon of an average household. This natural, and understandable, reaction of households is very strongly counteracted, in turn, by another factor, the so-called forced savings, understood to mean an unexpected part of current incomes due to market shortages. This situation ultimately weakens the impact of the rationality motive, resulting in excessive hoarding of goods in case they disappear from the market and strengthening a habit of buying goods to store them or “just in case they may be needed.” This means that consumers are guided in their purchasing decisions not by a need really existing, but by their preoccupation with safeguarding themselves to satisfy their future needs. As a result, consumers frequently purchase goods and services that are quite distant substitutes of products they would actually wish to buy. In many cases the “substitute” is alcohol. Forced substitution is accompanied by forced expenditure because, harassed by shortages and fear of further price rises, a consumer buys a product not when he needs it, but when it is available. The availability of products in conditions of shortage is limited not only by monetary factors (prices and incomes) but also by legal-administrative barriers to purchasing some goods and services (various forms of rationing), barriers connected with time earmarked for shopping, and barriers connected with vital strength, life energy, abilities, and even cleverness of particular individuals. As a result of market shortages and institutional constraints on freedom of choice, purchasing decisions are quite simplified, but the process of purchasing is complicated and elongated. The purchasing of many, oftentime basic, items not only involves loss of time but also is done at the cost of excessive exertion and humiliation connected with shopping. The last element results, first of all, from carelessness and rudeness of shop assistants, whose superior position makes consumers realize that they are at the mercy of those who serve them. In such a situation, acquiring the means of consumption goes beyond the institutional market and often takes place on the black market, intensifying the phenomena of bribery and speculation. Operation of the black market is favored by the fact that a large part of households strive by all means to get rid of devaluating zloties, buying many items at speculative prices, which increases their deficit on the market. Some goods, especially durables, are purchased not because of their utility values, but because their possession becomes a peculiar investment of savings and protection against inflation. Ultimately, in consumers’ awareness there is a growing fascination with items, for which the more difficult it is to acquire them, the more they are appreciated.
Changes
in Level
and
Structure
of Consumption
Because of shortages of many basic products and soaring prices, all causalities governing changes in the structure of consumption in “normal” conditions collapse. First of all, spending on food, tobacco, and alcohol tends to increase relative to the cost of consumption of non-food items, along with a sharp drop in the share of services in the population’s spending. The structure of food consumption also undergoes changes. An increasingly bigger role is played by products of little value from the physiological point of view such as bread, cereals, or potatoes, whereas
Consumer
Behavior in Economics of Shortage
J BUSN RES 1992:24:5-10
9
the share of meat, some fats, and vegetables and fruit (especially citrus fruit) decreases. The role of processed food in households’ consumption is diminished as well. Another characteristic feature of consumers’ behaviors, which gains an enhanced importance at the time of crisis, is the process of consumption renaturalization, a reversal of the normal development processes. This phenomenon finds its expression in increased inputs of one’s own labor for running and maintaining households and resignation from purchasing market services. The services meant here are particularly cosmetic and hairdressing services, repairs and renovations of flats, laundry washing, and different types of repairs. It appears to be very easy to resign from catering services. Consequently, their share in total households’ expenditure amounts to a fraction of 1% . Self-service becomes increasingly more common, especially among economically weaker households, which perceive it as the only possibility of strengthening the family budget. It should be remembered, however, that decisions about performing various jobs within a household involve outlays of work within a household at the cost of free time and rest, which produces negative social effects such as lowering professional activity, drop in labor productivity, etc. The above-mentioned renaturalization of consumption is the next symptom of defensive reactions. It constitutes a sad necessity for most households caused by a considerable drop in real incomes. A situation, due to insufficient supply and relatively low quality of production, also produces a disturbing phenomenon of extending the time during which possessed durable goods are exploited. Extended exploitation encompasses not only worn out appliances but also those whose further exploitation should be abandoned for safety reasons (e.g., automobiles exploited sometimes for 25 years and more). The above tendencies existing in Poland, a result of market determinants, are an expression of unfavorable changes in the structure of consumption and negation of causalities observed in the more developed countries. Simultaneously, the deepening market disequilibrium and a further deterioration of living standards do not justify expectations of tendencies connected with modernization of consumption.
Implications
for Activity
of Enterprises
Changes in consumers’ behaviors, both on market and outside it, must have their influence on the activity of industrial and trade enterprises. It would be difficult to draw, however, an explicit conclusion from this fact, indicating that a household as a subject of demand performs a steering function in relation to subjects of supply, and thus through its preferences, expressed on the market, it exerts an influence on the level and structure of production and supply. It seems that in the situation of market disequilibrium and the centralized system of management, the main emphasis in the activity of enterprises is laid on their adaptation to specific conditions of the environment, with consumer needs and preferences constituting only one possible point of reference. Moreover, in such a situation, enterprises develop definite rules of behavior that very often lead to conflicts among particular participants of the market. The conflict situation finds itself expressed in the fact that realization of goals by one of the subjects is usually accompanied by inability to accomplish the goal by other subjects, especially households.
10
J BUSN RES 1992:24:5-10
S. Gajewski
From the formal point of view, enterprises, as a subject of supply, are an equal partner in relation to households. However, in the situation of a deep market disequilibrium and a frequent monopolistic position, they hold a position of a much economically and organizationally stronger partner in relation to households, dictating their terms to households. A substantial surplus of demand over supply suggests, first of all, that enterprises do not encounter in principle any sales barrier. Moreover, since there are mainly buyers competing with one another, enterprises do not have any difficulties in obtaining high prices for their products either. For this reason they are not interested in conducting extensive market research, utilizing its results in their activity. Such an attitude is promoted also by relatively restricted autonomy of enterprises and a narrow scope of the functioning of market mechanisms in the economy. Due to the fact that practically every product, even of a very low quality, will be accepted by consumers, enterprises display little interest in developing and putting new products on the market. They are characterized by innovation indifference, which does not require any activities connected with product development. In these conditions, much more attention is devoted to the organization of material procurement and production processes, whereas manipulation of the market is often limited to raising prices. The situation in which enterprises are oriented mainly at production determined more by technical-balance possibilities than households’ needs, generates numerous negative socioeconomic phenomena, including ineffective use of raw materials, materials, capital stock, human factor, etc. However, one of the most serious repercussions of this situation is manifestation of the negative feelings of consumers. Harassed by inflation, permanent shortages, and an inability to realize stimulated needs, consumers not only express their dissatisfaction and frustration, but first of all advance claims concerning growth of wages and social benefits. It must be admitted that these claims are often accepted in the present conditions. In this way, households express their subjectivity and realize their steering function in relation to trade enterprises, and producers of consumer goods and services. At the same time, it is the main, and often the only, aspect of consumers’ behavior reckoned with in the activity of enterprises.
References Beskid, Lidia, et al., Living Conditions and Needs of the Polish Society, Polish Academy of Sciences, Warsaw. 1984. p. 17 (in Polish). Dietl, Jerzy, and Gajewski, Stanislaw, Determinants of Consumer Behaviours in Economics of Shortage, typescript, Department of Marketing, University of Lodz, Lodz. 1988. p. 69 (in Polish). Gajewski,
Stanislaw,
Hierarchy and Intensity of Consumer Needs of Households,
versitatis Lodziensis, Lodz. 1987. p. 101 (in Polish). Kornai, Janos, Economics of Shortage. North Holland Publishing
Company,
Acta Uni-
Amsterdam.
1980. Palaszewska-Reindl,
Teresa,
Polish Households.
saw. 1986, p. 208 (in Polish).
Everyday Life during Crisis, IWZZ,
War-