Are Consumers Empowered Or Manipulated?

from the maybe-both dept

A few weeks back we posted about Andrew Odlyzko’s paper about price discrimination online, and how merchants were going to try to make use of excess information they had about customers to get them to pay different amounts. There’s been a lot of press coverage in the last week about that story, thanks to the Associated Press picking it up. However, over at the Washington Post, they’re having a series that shows both sides of the issue. First, they write an article about how consumers are more empowered online because they’re searching out the best deals, and showing up to buy with all the relevant information. In such a situation, the article argues, the consumer is always going to win. Not necessarily, argues the other side, which contends that marketers are becoming extra manipulative with the deals they offer. Sure, they offer a rebate, but will you ever get it? Or, the terms of the phone deal you just signed up for are so confusing, that you have no idea you’re actually paying more. Plus, they don’t mention all the extra fees that will double the price. Only the most carefully observant shopper is actually going to notice where the marketing folks are trying to trick them.

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Comments on “Are Consumers Empowered Or Manipulated?”

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1 Comment
Munich says:

High Tech Haggeling

It’s great that consumers are getting information to negotiate the best price out of a supplier. And it is the supplier’s right to negotiate the best deal for himself – it’s called haggeling and hasn’t changed from ancient times at the bazaar (of which plenty are still in existance today). I have experienced bazaar haggeling personally and in some cultures haggeling is part entertainment, part match of wits and a part of the expected process (see Monty Python “Life of Bryan” for a humerous example where a merchant refuses to sell something without haggeling).

The issue is that U.S. consumers have been trained to accept the price given, are too lazy, etc. For example, when working with a “major priter company” one time, they put in VERY large coupons for an entry level ink-jet printer. Guess what the redemtion rate was? Around 10%. The HIGHEST redeption rate for any product is dipers at 20%. Same goes for mail-in rebates (they do get your address and other info, so that could have an effect on redemption rate).

The issue is that this all takes effort on the part of the consumer. An active, wary, clever consumer can get the best deal every time. Ones who sit back expecting the marketeer to hand them one…well, they can expect the same sort of deal they would get at the car-lot – one area where haggeling is still expected in the U.S.

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