Understand economics from scratch

Chapter 11 Is People’s Consumption Always Rational——You Need to Know a Little About Consumer Economics (3)
Another factor is that high-tech new technology products emerge in an endless stream. The functions and effects of these newly invented products are beyond the knowledge of ordinary consumers. Manufacturers must effectively guide consumption in order to stimulate consumers' potential needs.Among them, the most important thing is that manufacturers and consumers have a serious asymmetry of product information. The information that each consumer can receive every day is very limited. Compared with the vast information sources, consumers' attention has become an extremely scarce resource.It can be assumed that the product information that consumers can take the initiative to know, especially the information on new technology products, is close to zero, while manufacturers basically have a complete understanding of the product information they produce and sell, and there is a serious information asymmetry between the two. Therefore, manufacturers can only inform consumers of detailed product information through various communication channels, and make the information symmetrical as much as possible.

To put it simply, "guiding consumption" means that merchants use the strategy of "free experience" to attract consumers' attention, help consumers choose, make consumers establish initial recognition with the products or services they provide, and then promote possible purchase behaviors. the process of.The ultimate goal is to sell products or services and make money from them.Knowing this, when we encounter warm invitations from merchants, we must think twice before acting.

Differential pricing, affordable ceremony for top-tier discounts
In recent years, there has been a "top-grade discount trend" in some metropolises such as Beijing.Since 2003, top-grade discount stores of various sizes have appeared in various urban areas of Beijing.So far, there are dozens of them.Many consumers no longer go to places that are too expensive such as Contemporary and Shuangan, but instead go to "top-grade discounts".Because here are also brand-name products with high quality, but most of them have discounts below 5%.

The prosperity of Shangpin discount stores has also led to the emergence of other discount stores in Beijing.Take the LCX international boutique discount store as an example: after the appearance of top-grade discounts, the discount rate is as high as 1% to 5%.In particular, there are all kinds of well-known international brands of clothing, shoes and bags. Most of the products are first-line brands, and they are all around several hundred yuan after discounts.

Here, you can not only buy famous brand products, but also save a lot of money, which looks very cost-effective.Some people even say that every time a top-grade discount comes into the new product, it is a "benefit ceremony" for consumers.

The top-grade discount items are all manufactured by the manufacturer, but there is a huge gap between the price on the market and the price within the top-grade discount.The products of the same family are also branded products. How can there be such a difference in price?This is mainly due to the differential pricing principle of merchants.

According to the principle of differential pricing, merchants will adopt different prices for customer groups under different circumstances.Earning the maximum profit is the ultimate goal of the merchant.The usual way to achieve this goal is to try to sell the commodity at a price above the average cost.

Merchants who can enter the top-grade discounts are generally manufacturers that produce in large quantities, some well-known brands, and the scale of production is usually tens of thousands or millions of pieces.If the products produced by them over a period of time are considered as a whole, then the costs consumed in producing these products (including constant costs and variable costs) are evenly allocated to each product, and each product can be obtained average cost of a product.

Generally speaking, when these brand products first enter the market, they will be sold at a price much higher than the average cost due to their novelty and peculiar styles.The producer can earn a certain profit from each commodity. At this time, the producer's sales expectation for the commodity is - profitable.Therefore, in the short term, the price of commodities will not change, and producers will continue to produce in large quantities.

With the increase in the number of branded products, producers are also pushing more and more commodities to the market while realizing large-scale production and lowering the average cost. As a result, the prices of commodities tend to decline due to oversupply in the market.At the same time, due to the timeliness of some commodities (especially fashion and trendy items such as fashion), the prices of commodities have also dropped.In this case, the manufacturer can send the product to the top-grade discount in the name of changing seasons, clearance, etc. for sale.

In the case of top-grade discounts, as long as the price of the product can be guaranteed to be equal to or slightly lower than the average cost price, it is still beneficial to the manufacturer.Because they can clear inventory through places like top-grade discounts, speed up the circulation of goods and cash, and can also attract different levels of consumer groups and expand market share.

Merchants who use top-grade discounts to sell take advantage of the price effect, so that all prices are tailored for each customer, that is, consumers who can afford high prices are charged the highest price, and consumers who can only afford low prices are charged. or implement the most suitable selling price.

Branded products + differentiated pricing by merchants, these two points alone are enough to confuse consumers and flock to top-grade discounts for consumption.Facing the concentration of famous brands and low-priced products, many consumers come here to shop enthusiastically. After we understand the tricks behind the top-grade discounts, should we maintain a kind of restraint and rationality?

Free Lunch, Peanuts at the Bar
When a hotel opened, it advertised on TV and newspapers, claiming that it was free all day on the opening day.A few friends happened to have nothing to do that day, so they met to have this free lunch.Everyone was in high spirits before going to dinner, but everyone was depressed after dinner. Why?It turns out that what the hotel said is free all day is not for you to eat whatever you want, but according to the hotel's regulations, each person is provided with a free order meal. The so-called order meal is just a bowl of rice, a side dish, and a small bowl of egg soup. .

If you want to eat other, you have to pay for it yourself.It seems that this free all day is just a bait for hotel fishing.Look at the crowds of people who come to consume in the hotel, and everyone comes here for free.Although I was cheated, but there is no place to send out the fire, who told you to come, Jiang Taigong was fishing, and those who wished to take the bait, the advertisement clearly stated that the right to explain belongs to the hotel, although the words are small and not very eye-catching.Besides, you are too embarrassed to argue, in order to eat their free meals, do you still want them to control you to eat enough?In public, it's hard to save face.The free meal was not enough, so I had to order some fried vegetables and drinks by myself. Once the bill was settled, a few hundred yuan went out.This free meal is really not cheap.

As a business, what you pursue is profit maximization, why should they provide you with a free lunch?But in real life, there are always some people who believe such things.What is the reason?Because although everyone is an economic man and also pursues the maximization of their own interests, the rationality of economic man is limited, and people tend to lose their rationality in the face of interests, especially those that can be easily obtained.

We often see such advertisements: Our store has a clearance sale, and all products are 4% off!In fact, the label of the product has been modified before the discount, but the current price is doubled.After all, no one will lose money and make money.The goal of a business is to make a profit, so whether it is a shopping mall or a hotel, it is impossible to provide you with goods and services for free. A free lunch cannot exist.

Some may object that peanuts are free in many bars.But have you noticed that you can ask for peanuts at will, but the drinks are very expensive, and even a glass of water costs several dollars.According to common sense, the production cost of peanuts is higher than that of water. Why do bars do this?

The key to understanding this practice is figuring out how water and peanuts affect demand for the core product of these bars: alcoholic beverages.Peanuts and wine are complementary. If you eat too many peanuts, you will feel thirsty, and you will order more wine and drinks.Peanuts are extremely cheap relative to the profits of wine and beverages.Eating more peanuts can drive the consumption of alcohol and beverages, and bars mainly rely on alcohol and beverages to earn high profits, so the free supply of peanuts is just to increase the profit of bars.Conversely, water and wine are incompatible.If you drink more water, you will naturally order less alcohol.Therefore, even if the cost of water is very low, the bar will set a high price for it, weakening the enthusiasm of customers to consume.The free peanuts are actually just to guide customers to drink more.The bar's approach is exactly that sentence - there is no free lunch in the world.

Most people who have visited and traveled to the United States know that the National Gallery of Art in Washington is open to visitors for free.So, is there a free lunch abroad?In fact, the first floor of the National Gallery of Art in Washington is an exhibition hall, and the downstairs is a gallery, which sells painters' works, as well as art journals, albums, books, and handicrafts.Most of them sell imitations and prints of world famous paintings. Every famous painting exhibited on the first floor can find its imitations and prints downstairs, and the prices of the two are quite different.For example, the price of Van Gogh's famous painting "Sunflower" on the first floor is several million U.S. dollars, while the imitation sold downstairs is only 20 U.S. dollars, and the prints are even cheaper, and can be bought for a few dollars.Faced with such a large price difference, how can people not have a strong desire to buy imitations and printed materials?
Just imagine, if the National Art Museum collects tickets, there will definitely be fewer people who come to visit, and the number of people who buy imitations and handicrafts downstairs will also decrease accordingly, and the products sold will also decrease. will decrease.As a result, the ticket revenue may not be as good as the reduction in the external rent of the shops.Therefore, although on the surface, the National Art Museum does not collect tickets and is a money-losing business, in fact, it has already pocketed more money than tickets through the high rent of berths.

From this point of view, as a consumer and an economic person, we should not only pursue profit maximization one-sidedly. Facing the temptation of free lunches from merchants, we should soberly remind ourselves that "there is no such thing as a free lunch". It will let you pick the cheap one easily.

Learn about group buying, the power of gathering people online

Group buying is a new form of entertainment consumption in today's Internet era, and it is being sought after by more and more young people.Reasonable use of online group buying will save a lot of expenses for your own consumption.

The so-called online group buying means that consumers who do not know each other use the Internet's "power of gathering people online" to gather funds and increase their negotiating power with merchants in order to obtain the best price.Although the emergence of online group buying is only a few years old, it has become a new consumption method popular among netizens.It is understood that the main force of online group buying is young people aged 25 to 35, which is very common in big cities such as Beijing, Shanghai, and Shenzhen.

Nowadays, under the call of "saving money is the last word" on group buying websites and group buying posts, the price ranges from small commodities such as books, software, toys, home appliances, digital, mobile phones and computers to large ones such as home furnishing, building materials and real estate. For very transparent products, consumers gather in groups to buy because of the Internet.Not only that, online group buying has also expanded to health checkups, insurance, tourism, education and training, as well as various beauty, fitness, leisure and other service fields.

The benefits of group buying are mainly manifested in two aspects: first, the price of group buying is lower than the lowest retail price in the product market; second, the quality and service of products can be effectively guaranteed.

(End of this chapter)