Comparison shopping: When no choice seems to be a good one.

     I am a consumer. I admit it. I also try to make conscious choices -- picking products from companies that are less harsh to the earth, that work constructively with their employees rather than against them, and so forth. These are characteristics of the companies that are important to me that lead me to consider products in the first place.

     But, beyond that, I want to pick the product that seems to be the "best" to me. In order to do that, I need to understand what qualities I want, or feel that I need. Once I understand that, I check reviews and product comparisons to see what products best match to my desires. It is a logical process but it can drive people around me totally nuts if this is not the way they approach purchasing items. (The way they approach evaluations also drives me nuts -- it is an equal opportunity situation 😄 )

     In what is referred to as a "free market" situation, it is possible to make decisions solely upon the perceived qualities of a product. Qualities can include appearance, durability, price, features, societal responsibility, and so forth. Note that the perception is what counts. If a societal section decides that orange is the most beautiful color for eyeglasses then that is it. If a tall person is looking for a car then the head and leg room of the driver's seat area will be of great importance and value. If a short person is looking then they will consider a completely different selection of cars based upon their own needs -- probably for seat adjustment and ease of access to hand and foot controls. Each person has different needs and, thus, different sets of qualities.

     Some qualities should be more objective. A new tire with a lifetime of 50,000 miles should be considered to have better wear than another tire that has a lifetime of 20,000 miles. Of course, there may be other qualities that are more important than lifetime -- such as the ability to handle wet roads in Seattle (which may be of no interest in the Sahara).

     But what happens when you have only two choices of tires -- one that has a lifetime of 20,000 miles and one that has a lifetime of 15,000? All other qualities equal, people choose the tires that last 20,000 and the manufacturer of the 15,000 mile tire goes back to their labs and tries to develop a tire that lasts 25,000 miles. This is called constructive competition. The end result of such competition is the development of better products and lower prices for consumers. This is the ideal situation for the consumer.

     What happens when there is only ONE (1) supplier of tires for a region? They sell 20,000 mile tires for a while and then they decide to start selling the 20,000 mile tires for a higher price and selling a 15,000 mile tire for the same price as they used to get for the 20,000 mile tire. This is called a monopoly situation and is not a good one for the consumer or the quality of products. Monopolies can either be established by "natural" restriction of access to resources (all of the widgets are found only in areas controlled by a company) or by economic leverage (all of the competitors are under-priced until they go out of business or are purchased by the larger company). Laws can be created to control this situation to improve the situation for the consumer and for the improving qualities of the product -- but sometimes no laws are created and the monopoly continues to exist and degrade quality and inflate prices.

     By definition, there cannot be a monopoly with more than one company in active competition. But there can be private agreements between two or more companies that allow both, or all, to expand their profits at the expense of the consumers and which produce no constructive competition. This group of two or more companies can be called a "cartel". Although no single company within the group is a monopoly, they are able to control access to resources and to the consumers so that other companies that are not part of the cartel cannot compete. Laws can be devised to restrict this but they are much more difficult to monitor and enforce -- and, once again, it is possible that no law will be created.

     Finally, it is also to the advantage of each company to restrict comparisons. This can be done by restriction of the movement of information (control of media access, for example). It can also be done by creating "brand loyalty" -- such that the consumers directly identify with the product of the company rather than the qualities of the product. With sufficient brand loyalty, a company has a base of consumers for which it needs to provide neither quality nor value.

     So, on to the title of the blog. What happens when no choice seems to be a good one? In a free market situation new companies will arise if adequate constructive competition does not take place among existing companies. Old companies die away if they cannot maintain satisfaction of their consumer base. This can only happen in a truly free market and a truly free market can only exist with regulation and supervision. Otherwise, monopolies, cartels, and other restrictions penalize the consumers and the quality of the products in favor of the profits of the companies.

     I used tires as an example of a product. In reality, anything that people choose (or do NOT choose) is a product. This may include political candidates, or services (education, for example), or resources (water, for example), as well as manufactured products. Within any product marketing situation the free market allows consumers the best options. Giving the illusion of a free market while actually controlling the choices of the consumer favors the producers. It is a continual struggle as the needs of each are weighed against each other.