Understand economics from scratch

Chapter 12 Is People’s Consumption Always Rational——You Need to Know a Little About Consumer Economics (4)
The reasons why group buying can bring the above benefits: First, participating in group buying can effectively reduce transaction costs for consumers, and obtain reasonable low prices on the premise of ensuring quality and service.The essence of group buying is equivalent to wholesale, and the price of group buying is equivalent to the wholesale price of the product in the group buying quantity.Through online group buying, passive scattered purchases can be turned into active bulk purchases, so you can enjoy lower prices and better services for products of the same quality.The second is to completely change the disadvantaged position of consumers caused by market opacity and information asymmetry in traditional consumption behavior.Learn more about product specifications, performance, and reasonable price range by participating in group purchases, and refer to the objective and fair evaluation of products by group purchase organizers and other buyers, take the initiative in the purchase and service process, and truly buy good quality and service High-quality, reasonable price and satisfactory products can achieve the purpose of saving time, worry, labor and money.

In addition, group buying is especially suitable for the following groups of people: friends who don’t know how to buy things and always leave regrets; friends who are worried about individual consumption and cannot get the protection they deserve after sales; friends who are worried about buying fake and shoddy products; friends who don’t understand market prices Friends who don’t know how to choose materials or don’t like shopping in the market; friends who don’t know how to bargain, don’t like to bargain, and don’t bother to bargain; friends who have a strong sense of responsibility for the health of themselves and their loved ones, and must buy products that meet environmental protection standards; College students with low economic strength.

At present, there are roughly three types of online group buying: the first is spontaneous group buying; the second is professional group buying, and there have been many different types of group buying companies, websites and individuals; the third is sellers. Self-organized group buying.The common point of the three forms is that participants can get products at a lower price than the market while guaranteeing authenticity.How to make the most cost-effective online group buying products?Before participating in group buying, you must do market research first, and you must know the price, brand and performance of the product you want to buy. Only when you know what you want, you will not be confused by the so-called "group buying discount" on the Internet.

As a new way of consumption, online group buying has no relevant rules to restrict it, so fraud cases are common.In this regard, as a way of consumption, online group buying should be considered comprehensively when consumers choose online group buying to obtain price discounts, and they should be cautious about transactions.

After all, online group buying is just a loose group temporarily organized for a specific purpose.In reality, group purchasers disperse after successful transactions, and once disputes arise after sales, it is often difficult to reorganize, which brings difficulties to consumers' rights protection actions in the future.Therefore, participants in online group buying should find ways to sign group buying agreements to avoid various risks.

"One-time" transaction, fat merchants
Tan Hui took a set of wedding photos in a well-known bridal shop in Beijing.When she was doing makeup that day, the makeup artist first praised her, and then recommended her to use a box of cosmetics containing 3 bottles of colored liquid. "How much?" "240 yuan." "Isn't it 80 yuan?" "That's the price of one bottle. The effects of these three bottles are different. The red one is anti-allergic, and the blue one is anti-oil. The yellow one is isolated." "I have good skin, do I still need to use it?" "Of course I do, the makeup lasts long after using it, and the effect is natural, crystal clear, and can protect the skin from the damage of makeup powder." " Is it really that good? Then I'll listen to you. Just make me look better."

After the whole set was filmed that day, Tan Hui spent the whole time laughing and praising, without feeling tired at all.According to her series, there should be only 40 photos, but the photographer took 200 photos. It should be a good thing, but she spent a whole morning picking photos.In these photos, the bride is beautiful, but the groom looks average, while the groom is radiant, and the bride has something unsatisfactory... It's just that there is nothing perfect.In the end, I originally planned to only pick 40 photos, but had to add money to buy 40 more photos. "If you buy 10 more pictures, we can give you a crystal photo frame. The quality is very good." "What? Buy 10 more pictures? You can send me one!" "Sorry, our crystal photo frame is very good." A single photo frame is 1 yuan a piece, it’s not because you choose a lot of photos, we don’t give them away.” “I’m still taking advantage, such an addition is completely beyond my budget...” The final result is to add another photo frame. Buy 600 photos and "get" a crystal photo frame for free.

On the one hand, it is the beautiful photos that I have paid a high price, a day of time and energy to take, and on the other hand, it is the threat of super high prices from the store.In other words, Tan Hui had no choice but to choose the latter, either to give up the beautiful photos that she wanted to obtain at a high cost, or to accept the "robbery threat" from the store.It can be said that as soon as people enter the bridal shop, they enter the trap that the shop has already designed, and they can only drill into it step by step.At the beginning, judging from the formatted contract provided by the store, it clearly told you that 20 photos will be sent and 100 photos will be included in the book, but consumers are not told whether there is a fee for the book, and the right of interpretation rests entirely with the store.When consumers enter the process of taking pictures, it seems that the store's service is very thoughtful and enthusiastic, and they will try their best to meet the requirements of consumers, but this is just for the store to make it easier to carry out "robbery threats" in the future. Foreshadowing, because the more photos are taken, the more opportunities for consumers to pay a high price.When seeing the photos they like, consumers have already paid a high cost. If they choose fewer photos, the unit cost of each photo will be higher. As a rational consumer, they will try their best to choose their own photos at this time. favorite photos in order to reduce the unit cost per photo.Why did the store's "robbery threat" succeed?The reason is that this kind of transaction is a one-time transaction, and no repeat customers are expected at all, and in this one-time transaction, the more the store rips off customers, the higher the excess profit it will get.

There are many similar things.It is often easy for us to buy high-priced and low-quality goods in tourist scenic spots, but it is not easy to be cheated in department stores in the cities where we live.We buy vegetables at the vegetable market in the dialect area. If we speak Mandarin, we often pay higher prices for vegetables and meat than the dialect-speaking locals.

Economics reveals the reason for this phenomenon for us, and the answer lies in the number of transactions.The seller expects to conduct repeated transactions with the buyer many times, and they will offer a reasonable price to obtain opportunities for repeated transactions, and ultimately earn more profits.And when the seller thinks that there is only a limited number of transactions with the buyer, they will often make full use of the asymmetry of information to deceive the buyer with a fraudulently high price to obtain the maximum profit.These are things that we need to guard against in our daily life.

Buying a house is a big deal, don't lose your mind

Mr. Wang is a Hong Kong native. In the early 20s, he had a good life.At that time, Hong Kong's economy was very prosperous. Mr. Wang's salary was raised every year, and stocks and funds were all on the rise.Mr. Wang was also moved when he saw all the friends around him investing in real estate.

In 1997, housing prices in Hong Kong were at a high level. Under the psychological effect of comparison, Mr. Wang took out more than 100 million Hong Kong dollars in savings to buy a house.At that time, he borrowed 280 million Hong Kong dollars from the bank to buy a house worth 400 million Hong Kong dollars and 70 square meters in the urban area.At that time, a house of 400 million Hong Kong dollars was not considered a good house, because the overall housing price was very high.Seeing the house price rising every day, Mr. Wang didn't even think about selling it again.

Subsequently, the Asian financial turmoil struck, and housing prices dropped.Mr. Wang's house quickly depreciated to 180 million Hong Kong dollars. Mr. Wang thought that the house could still be lived by himself, and it didn't matter if the house price fell.Banks, however, don't see it that way.The bank is in business. It lends you 280 million Hong Kong dollars, but your collateral is only worth 180 million Hong Kong dollars. The bank will worry that if you don't come back with the money, it will lose money.As a result, the bank immediately put pressure on Mr. Wang, forcing him to increase his loan repayment efforts.As a result, Mr. Wang had to bid farewell to the superior life in the past, and after years of struggling, he was able to pay off the loan.

When Mr. Wang saw other people buying a house, he could not proceed from his own actual economic ability. Driven by the mentality of blind comparison, he made wrong investment behaviors, and finally made himself suffer.

In fact, when many people make a decision to buy a house, they will be as hot-headed as Mr. Wang.Although people who buy a house feel that the house price is too high, they will feel anxious when they see everyone buying a house.As a result, under the urging of anxiety, house buyers often spend a lot of money to buy houses at high prices, pushing house prices even higher.

According to the law of market economy, the price of any commodity will have ups and downs.When the market price of a commodity is much higher than its real value, the laws of the market kick in.The real estate market is no exception, so a sharp rise in house prices will always be followed by a sharp fall.

In the rising housing prices, the smell of high real estate profits will lure people to flock to it.Investors with richer funds compete to build more and bigger properties, hoping to get more profits; small investors compete to buy several properties, hoping to sell them at high prices; In the comparison, I also raised my own standard for buying a house from a small apartment for family life to an enviable luxury house.

However, building a home is a slow process, often taking several years to complete a project.In the past few years, real estate investors have heard and seen good news, and more investors will put more money into real estate.Finally one day, everyone will find that the original shortage of housing supply suddenly disappeared overnight, and there is a large surplus of housing supply.This kind of surplus is not the surplus of the living population, but the surplus of those who can afford high housing prices.

As a result, housing prices have fallen.Because of the previous irrational growth, once there is a fall, the speculative mentality of home buyers will be broken, and housing prices will plummet rapidly.

Some people will say that the drop in housing prices just allows more people to buy houses.In fact, the decline in house prices is relative to the highest house price. The house price of 10000 yuan per square meter has fallen by 40%, and the remaining 6000 yuan is still unaffordable for the poor.However, a 40% drop in house prices is a nightmare for real estate investors.Their loans become non-performing assets of the bank, and the rapid increase in bank bad debts will drastically reduce the loan amount.Without bank loans, investors will tighten their pockets, and the entire national economy will lose momentum for growth.

Those who have the money to buy a house and those who have the ability to sell a house are both people with strong economic capabilities. Are they irrational?This is mainly due to the particularity of the real estate industry, under the effect of comparison psychology, the rational economic man became impulsive.

Houses are different from food, the value of food is reflected immediately after eating, and it will disappear after a few hours.Therefore, as long as there are tens of thousands of people buying and selling grain in the market, the price of grain must be rational.However, the value of a house can last for decades, and most people only buy a house once or twice in a lifetime, so the house buyer's judgment of the house's value includes many subjective factors.

It also takes several years to see the benefits of investing in real estate, which leads to more subjective psychological factors in the judgment of real estate investors on investment returns.Under the influence of these subjective factors, people’s thinking about buying a house has become very simple: “When others buy a house, I want to buy a house; when others buy a big house, I also want to buy a big house.”

In fact, in a sense, buying a house is a state of mind.In the process of buying a house, people have too many expectations.Buying a house needs to be done according to one's abilities. Today, buying a house has become more and more a goal of people's lifelong struggle. Buying a house is no longer a purely economic act, but has evolved into a competition of mentality.

To win in this competition, you need to have a healthy state of mind.The key lies in whether you can maintain the rationality of the economic man and not treat buying a house with a comparison mentality.In this way, the house will become a real destination, rather than a physical and financial burden.

(End of this chapter)