Investigating The Consumer Protection Act (CPA) and promotional strategies of retail business in Durban

Abstract

It was imperative for the Consumer Protection Act 68 of 2008 (CPA) to be enacted in order to assist historically disadvantaged individuals to fulfil their rights and to promote their full participation as consumers. In the past, under-privileged consumers did not have the required information to protect themselves as consumers nor did they enjoy access to legal representation. With significant levels of poverty and unequal distribution of income, high litigation costs presented a challenge for a consumer seeking justice. Historically, consumers suffered a host of abuses, including bait advertising; misleading advertising; suppliers failing to honour guarantees; non-disclosure; sub-standard product quality; and terms that were unfair. Recognising the fact that economic marginalisation is serious and unjust, the CPA was designed to prevent businesses from gaining a competitive advantage by engaging in unfair business practices. The overall aim of the empirical study was to evaluate the implications of the CPA for retail businesses in Durban, with a focus on the promotional strategies currently used by businesses in the sample. The study reviews related literature on the significance and challenges of retailing; the marketing mix; promotional strategies; the complexities of customer retention and market segmentation; the various types of promotional tools; the promotional mix; as well as preferred, cost-effective promotional strategies and CPA compliance in general. It was established from the literature review that retailers prefer costeffective promotional strategies. Email marketing continues to be the most inexpensive and effective way to stay in contact with a customer. The empirical study explores particular aspects relating to the promotional strategies that retail businesses in Durban are presently using, such as their preferred choice of such strategies; the provisions of the CPA that affect the promotional efforts of retail businesses (small to medium) in Durban; the measures that retail businesses in Durban are adopting to address the restrictions placed in terms of the CPA; and the implications of the implementation of the CPA on promotions expenditure for retail businesses in Durban. The study adopts both quantitative and qualitative methodologies. In total, 400 questionnaires were despatched and 330 were returned, which generated a response of 82.5 %. Eighteen structured interviews were also conducted with marketing managers and business owners. The findings from the study indicate that radio advertising, SMS, email and telesales are used by the businesses in the sample. In-store promotions are conducted by 61% of the participants. Other promotional strategies used by the participants include vehicle branding, distribution of handbills, E-commerce, telesales to existing and potential customers, calling on customers by marketing representatives, newspaper advertising and website advertising. Opt-in email and SMSs campaigns, social media, in-store promotions, vehicle branding and trailer advertising are the preferred promotional strategies in these businesses. Businesses’ preferences for promotional tools are based on cost and reaching a larger target audience quickly. A framework to assist all retail businesses in South Africa with the impact of the CPA on promotional strategies of retail entities is proposed. The framework, with transformation in a historically disadvantaged society as a backdrop, meets legal requirements, offers a proconsumer approach to retailers, enhances business reputation and aims to increase the bottom-line. The study also concludes that the CPA aims to bring about fairness and transparency in consumer-related transactions and encourages good business practises for suppliers of goods or services. However, businesses are being forced to adopt more expensive and labour-intensive measures to address the restrictions of the CPA.