Supply and Demand, Competition, and Free Enterprise FOR THE CONSUMER!

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A somewhat anti-price-control cartoon...

I had a brilliant idea recently.

Let's examine some of the axioms of the Free Market.

A.  The Free Market is good for everybody.

B.  If you build a better mousetrap, the World will beat a path to your door.

C.  If you're a business, you can charge "anything the traffic will allow."

D.  The price of a product or commodity will settle on something proportionate to the demand for that product, which, in turn, depends on both its quality, and its scarcity.

E.  Scarcity not being a factor, the better product will sell at a higher price.

Half of sample?  How did they pick which half?

[As I have pointed out before,] many of these axioms either assume that the public (a.k.a. The Market) has instantaneous information about all products, or that products are sold without alteration for long periods of time.  Even if you are a complete believer in the flavor of Market Economy that is in force in the USA ---and I know no other flavors of it--- you have to agree that this is the weak link in the logic of the Market Economy: people do not learn about the weaknesses of a product right away, and manufacturers and retailers continuously fiddle with the products, so that no one knows enough to make an informed judgment on the value of a product.

For instance, take a new model of sneaker.  It is a while before the word gets out that it tends to encourage, say, twisted ankles.  Meanwhile, thousands buy the product, only to find that the company has made its money and quietly disappeared.  The general response to the phenomenon is that the Buyer must Beware.

OK.  There are other things: the Law requires that published descriptions of products and commodities must be truthful and factual, but in practice there is a great degree of latitude.  Businesses often lie like thieves, and can get away with it if they can prove that there is some basis in fact for their claims, no matter how tenuous.

The idea of Bait and Switch is kind of complex: you're not allowed to aggressively advertise a particular product, but not have it available at your outlet.  It used to be common for businesses to draw unsuspecting customers in with a description of a fabulous product at a fabulous price, and then offer either an inferior product, or a far more expensive product.

The Bait-and-Switch concept recognized, for the first time, that the time and the distance between one aspect of Marketing and the other has negative consequences for the consumer.  But there is a tacit agreement that businesses can indulge in a certain level of deceit, and consumers must allow for it.  Advertising must be allowed on any commercial medium.  Advertising need not be completely truthful.  If a particular business, or manufacturer or brand name is too deceitful, the public (it is believed) will deprecate their product.  If an advertisement is even more deceitful, lawsuits can be brought against the manufacturer or seller.  But ... that's business, as everyone loves to say.

If businesses are allowed ---even encouraged--- to be less than candid about their products, why can't consumers be deceitful in our own interests?

Providing information
A large proportion of manufacturers require you to register your product.  As a result you're bombarded with advertising for other products, some of which are completely unrelated to your initial purchase.  I think it is in the interest of the consumer to actually provide disinformation, so that the manufacturer actually has to improve their product, without simply making it superficially attractive to their perceived market.  So, instead of making, say, an Iphone a popular color, like chartreuse, they must actually make it work better.  A huge amount of manufacturer effort is channeled towards making products superficially attractive, and not attractive in the essential way it performs its function.

If you call them on it, they will actually show you research that proves that people tend to buy products that are superficially attractive over products that are effective.  In other words, their perverse development procedures are our own damned fault.  This is all in line with students selecting colleges that have successful athletic programs over schools with good academic programs.  Evidently, Dad wants his kid to go to a good football school, while Mom wants a school with more Mom-ly characteristics, e.g. better food and more attractive shrubbery, and if someone had the guts to check out this suspicion, it will be proved true.

For years I have provided false information in the questionnaires that came with most products.  I pretended to be a 19 -year-old single mother of three, or whatever weird idea popped into my head, and filled in preferences that would make them thoroughly confused.  But now I suspect that they have automatic ways of filtering out obviously bad data, such as a blind, homeless quadriplegic that belongs to the NRA, and so on.

Providing disinformation about product demand
The greater the demand for a product, the higher the price a manufacturer will set.  (Some of them are canny, and set a low price initially, to make it harder for the competition to get their products out.  This is what Kelloggs and General Mills did, successfully putting smaller companies out of business.)  But companies don't really measure demand directly; they try to assess demand by doing sampling, and surveys.  Unfortunately, I suspect that many manufacturers keep an eye on publications such as Consumer Reports, and use any favorable reviews as a basis for pricing.  If manufacturers don't do it, retailers certainly do.

I have walked into an auto dealership, and asked to look at a particular model.  "Let me show you what Consumer Reports says about this car," said my herder at once, and hustled me towards his office.  But when I pointed out that the manufacturer's wholesale price was thousands of dollars lower than the sticker price (the actual price on the car), I was told that, well, the business has to make a profit, and they employed thousands of people, and there's an enormous amount of overhead, and yakkity yak, blah, blah, blah.

OK, sure.  They have expenses.  But the expenses are not as high as they make out.  (And the salesmen don't make as large a share of the profits as they would like, and if they sell a car for less, they get a smaller pittance than they would get otherwise.  It depends on the dealership.  The owner of the dealership usually goes home with most of the money.)

Consumer Reports advises prospective car buyers to be capricious and unpredictable.  Above all, they advise, do not fall in love with a particular model.  In other words, they've stumbled on the principle that customers can strike back at businesses by offering disinformation, at least about their attitude towards a prospective purchase.

Disinformation about Demand
Can we be usefully deceitful about the demand for a product?  Is there some way we can subvert the manufacturer's research about product demand?  If anyone can think of a clever way to do this, please, please let me know.  (How about buying 20 copies of something, from different places, and returning all but one?)

[To be continued.]