Libertarians hold dear the idea of the uberman consumer, the hyperrational, fully formed autonomous being that springs from the womb to take good decisions in the marketplace. But when one reads marketing literature, a different consumer is encountered. Often this consumer is an object to be manipulated; one who holds totally irrational ideas that must be shaped or corrected; one that has to be acclimated to changes, and managed to prevent revolt.
One also encounters shockingly frank discussions of consumers' lack of sophistication in the literature. This brings me to an article in Monday's Wall Street Journal Report on marketing. It was written by Madhubalan Viswanathan, Jose Rosa, and Julie Ruth, marketing professors at University of Illinois at Urbana-Champaign, the University of Wyoming, and Rutgers (respectively).
This article discusses the problem of selling to indigent, low-literacy consumers in third world countries. The authors explain that 14% of the American public is functionally illiterate, thus, a major segment of US consumers is also described. How can retailers put this vulnerable group of consumers at ease, help them process product prices and discounts, and help them understand value? This group faces challenges unimaginable in our lives. I would love to paste the entire article. Here are some highlights:
CONCRETE THINKING
One of the key observations we made is that low-literacy consumers have difficulty with abstract thinking. These individuals tend to group objects by visualizing concrete and practical situations they have experienced. They exhibited what science would call a low grasp of abstract categories -- tools, cooking utensils or protein-rich foods, for example -- which suggests low-literacy consumers may have difficulty understanding advertising and store signs that position products that way...
Scientists, what is a low grasp of abstract categories? Aren't these categories socially constructed? (The authors do hint at this.)
It continues!
One of the most potentially detrimental results of concrete thinking, however, is the difficulty that low-literacy consumers have with performing price/volume calculations. They tend to choose products based solely on the lowest posted price or smallest package size, even when they have sufficient resources for a larger purchase, because they have difficulty estimating the longevity and savings that come from buying in larger volumes. Some base purchase decisions on physical package size, instead of reported volume content, or on the quantity of a particular ingredient -- such as fat, sodium or sugar -- but without allowing for the fact that acceptable levels of an ingredient can vary across product categories or package size.
This observation presents major public policy implications. If a large segment of consumers are challenged by basic price/volume calculations, evaluating secondary characteristics of products would be next to impossible for them. How can one obtain informed consent with these populations on any number of transactions--from computer licenses to privacy policies and credit card agreements?
MISSPENT ENERGY
We found that low-literacy consumers spend so much time and mental energy on what many of us can do quickly and with little thought that they have little time to base purchase decisions on anything other than surface attributes such as size, color or weight.
[...]
When shopping in unfamiliar stores, some low-literacy consumers will choose products at random, buying the first brand they see once they locate a desired product category or aisle. Others simply walk through the store, choosing items that look attractive based on factors such as packaging colors or label illustrations, without regard to whether they even need the product.
The article concludes with a series of recommendations on how to reduce unease among this population, and help them better understand discounts and what they are purchasing. If you have a subscription to the Journal, it's worth a read. I'm fascinated by it, both as someone trying to understand consumer challenges, but also because of its description of the unuberman consumer.
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Hmmm.... Nothing swells the heart like knowing how much effort people are going to, in order to manipulate people they have a low opinion of, into buying shit that they don't need.
On the subject of price/unit calculations, a trend has just been started here in Australia when the German supermarket chain Aldi moved in. Aldi do unit-pricing: Every item has a small breakdown of cost/kg, or cost/100g, or cost/relevant unit.
I'm not math-illiterate, but the time I am saved from doing sums on oddly sized packages is a major reason why I shop at Aldi.
Not only but also: here in Queensland the government is regulating to force all major stores to introduce unit pricing.
Two weeks ago, FCOJ was cheaper per unit in the small volume container than in the large volume container. At the same time, canned tomatoes were cheaper per unit in the large volume container, while butter was cheaper per unit in the small volume container. Yesterday, FCOJ was cheaper per unit in the large volume container, and tomatoes were cheaper per unit in the small volume container - both having changed. Butter was unchanged - but I know, from experience, within a week or two, butter will also switch.
That's what all 3 of the 3 grocery stores nearest me do - each product alternates between being cheaper in large volumes and cheaper in small volumes. And different products have cycles of different lengths. These grocers make money off of the people who don't check the price per unit number (printed in the smallest available font) for every purchase.
What about the time-challenged consumer? I for one, have better things to do than hang out in the 'market' being a super-rational uberconsumer.
Libertarian, like most other idealistic philosophies, assumes that most other humans are just as XXXX as I am, where XXXX in this case is the attributes of self-reliant, intelligent, rational, independent. Oddly, people aren't.
They could have been if long ago government schooling seriously adapted to the challenges of educating students for the success in a nation dominated by the middle-class. (These schools started out as essentially training programs for those entering the automation industry in the late 1800s to early 1900s.) That is, if schools had bothered to rigorously train students on the use of, say, the scientific method, or deductive reasoning, and to train them to apply these concepts to every day life, then perhaps American marketers wouldn't find the typical American so manipulable. Classes such as "home ec(onomics)" should not only be mandatory, they should be extended over several years, and applied to nutrition and health. Learning evolution is cool, but what does it matter if I cannot understand why it's a bad idea to stop halfway through an antibacterial treatment?
What do you think?
llewelly, my grocery stores do the same thing, plus something even more annoying: the "unit" they use for unit pricing varies, even within a category. For example, some of the shelf tags for coffee give price per pound; others give price per ounce--so I have to either multiply or divide by 16 to compare the prices. And they'll use bizarre units, too--like price per pound for liquids (who buys milk by the pound?!) or price per unit volume for canned goods. And a lot of the tags don't actually have unit prices on them; or it's not clear whether the unit price on the tag is the sale price or the regular unit price. I have difficulty identifying the best deals...and I have a Ph.D. I can't even imagine what someone who is barely numerate or literate goes through. Especially when the "good deals" change weekly.
Dubito, we have Aldi here in the US too, and I love it. My husband & I get almost all our food there--we go to the "regular" grocery only for products Aldi doesn't carry. There is certainly something to be said for a lack of variety in certain circumstances. Certainly makes shopping quicker and easier!
But we can't teach deductive reasoning and critical thinking in the schools! What if they begin to question *our* beliefs? That would be horrible*
Everyone wants critical thinking taught until it is their sacred cow being turned into hamburger.
*sarcasm... really.
s/just as XXXX as I am/just as XXXX as I like to think I am/
Don't underestimate the power of wishful thinking. Joe the Plumber is stressing out over a thousand a year in his business-owner fantasy and ignoring the difference that tax breaks might make in his ability to get there (among the well-covered other problems with his misunderstanding of the proposals.)
The biggest problem with radical Libertarianism (that is, anarchy) is that it hand-waves away game theory and minor economic considerations such as transaction costs in trying to force the world into a pure market model (see Coase for more on why this is insane.)
Dr. Kate, my grocery store does the same thing. The section with cooking oil, for example, has a lot of different sizes of containers. The smaller containers give the price per ounce, and the larger containers give the price per gallon. I'm usually the only person at the store standing in front of the aisle for minutes, using my cell phone's calculator.
I've only recently noticed that the larger packages aren't always a better deal, even when everything's on sale. The store brand jam at my regular super market comes in three different size containers. For raspberry jam, the middle container is the best unit price. For grape jelly, the largest container is the best buy.
"some low-literacy consumers will choose products at random, buying the first brand they see once they locate a desired product category or aisle." I'm not that far off from that (aside from the low-literacy part). But that's simply because if I get more variation in brands I can get a better idea about more qualitative issues about different brands. When I've already bought a few different brands of the same thing and can include things like taste then I can start making more rational decisions.
It is not only the poor and suboptimally educated who "choos[e] items that look attractive based on factors such as packaging colors or label illustrations." Go to a store with a large wine selection and notice all the bottles with depictions of cute animals.
@hedberg, so totally right. Marketing in wine is hilarious--people really do choose based on the label. Third party rating could be provided, but it rarely is.
Hot sauces, too.
Can anyone honestly say that they can, in a blind taste test, correctly identify MITCH'S HOT-DANG BURN-YER-BUTT SAUCE versus FRANK'S DANTE'S INFERNO (ON CRACK!) SAUCE versus STEVE'S STOMACH-LINING-DISSOLVING VROOM-VROOM SAUCE?
No, because they all taste like sulfuric acid. They buy them for the stupid names and cutesy labels. It's more a "this label suits my personality and lifestyle!" thing, hence the reason why there are now eight billion of those freaking things.
Oh, wine, eh? In the realm of woo-woo, the marketing of wine (and wine gimmicks, like that daft magnet collar that's supposed to "elongate" the tannin molecules or something) is a post all to itself.
Third-party ratings are pretty useless too, since wine "quality" is so very subjective. I seem to recall a study in which the known price of a bottle of wine actually changed the fMRI pattern in their brains when they tasted it. I.e. same wine, different price gave a different brain pattern. And you thought the demand curve was monotonic!
Man, high-end audiophiles could be a whole series of posts unto themselves.
Hey look: a bag of magic rocks that will improve your audio connections!
There was also a product that was a jar of the same semiprecious rocks that was supposed to improve sound quality just by sitting in the same room as your system, but I haven't been able to find it again.
@minimalist, hilarious!
Have you seen the comparisons between monster cable and coat hangers?
http://www.engadget.com/2008/03/03/audiophiles-cant-tell-the-difference…
When choosing among wines I've never tried, I go by the graphic design on the label. There's a certain simple, non-modern style that tends to be a good indicator of whether I'll like the wine. It's non-rational, but it's about all I have to go on. (How does one become a rational consumer when the selection is so enormous?)
I have noticed the same thing with pet food: sometimes ounces, sometimes pounds.
"For example, some of the shelf tags for coffee give price per pound; others give price per ounce--so I have to either multiply or divide by 16 to compare the prices."
You know, back in the 1700's the French invented something called the metric system to deal with this problem.
Lab Lemming, I was going to say -- I never have that problem, because all of the unit prices in the grocery stores I go to have the units in handy decimal format. It makes things easy enough for even someone with a bad case of dyscalculia (*wave*) to figure it out. Unfortunately, they do tend to put the unit prices in tiny print, but I'd rather the unit prices were there than not at all.
This thread also does raise an interesting point, at least from my perspective (which is the perspective of someone with an advanced degree in what amounts to applied rhetoric): The definition of "literacy" is getting more and more complex as time goes on. To be fully literate in North American culture, it's not enough anymore to be able to read and write reasonably competently; you now have to be able to read and/or process complex information in ways that people a couple generations ago never had to. I would also argue that the increased sophistication (read: subterfuge) of marketing and advertising has gone a long way toward raising the bar for deciphering complex information.
I know of one gas station minimarket that doesn't even bother putting prices on their candies. Is the Hershey's bar .60 or .80 or .99? Whatever.
Actually, most people, including self-proclaimed experts, simply cannot evaluate in any objective manner how much they really like various foods and drinks. It is rather well-known within the wine industry that wine ratings and prices are essentially random noise. But customers insist on buying wines with ratings, and insist on paying top dollar if possible. If customers get pleasure from fake numbers, what, exactly, is the concern?
Package shape and coloring is actually important, so customers who rely on them are not as foolish as some imply here. If you serve Sprite in a red Coca-Cola can, people will consistently rate that Sprite as less lemony than the same Sprite served in the usual green cans. Surprising but true.
About a year ago, I read an article, I think in the NYT, about a doctor realizing he had an illiterate patient, and his suspicions that this is actually a widespread problem.
As part of my participating in a training program I was asked if there was anything I would like to add to the program. I noted that many in the training program were easy prey for car salesmen and others who would get these men, most of who had little more than a moderately poor high school education, into credit problems and burden them with debts for the long haul.
Most of these otherwise fine fellows had little or no idea about how fiance, credit or time payments and interest works. Because of this at their first pay raise many would go down to the local car dealership and make patently foolish deals to buy trucks. Many show up the next day proud of the fine deal they have made completely unaware that lured in by 'low monthly payments' they have agreed to a payment plan that will continue long after the truck needs replacement. Before this I had no idea you could get into a seven year payment plan.
I suggested that one class day, four hours, every year should be set aside to bring in a financial adviser to teach a short-course in finance and budgeting. I pointed out that many credit unions have such experts on hand and they might, as part of their community support and good will advertising efforts, they might get such a lesson for little or no cost.
I left the organization soon after and doubt any such classes were ever scheduled. So it seems likely that yet another generation of country boys will be paying three times as much for their transportation as they should have to.
It saddens me to see otherwise good guys get into a life course where lack of education means they get screwed on house and vehicle payments, they get their girlfriends pregnant early and they get and stay in debt their entire lives. Guys who literally have to get four or eight hours overtime a week just to break even and who will remain pawns for employers, bankers and marketers for generations. A family tradition of being working poor and just one paycheck away from destitution.
That's ghastly. If if wasn't for the fact that "monkey" has racist connotations in a lot of the world, that's the simile I'd use. Are there really so many subhumans out there? It seems so.
How do these observations apply to the democratic process?