Speaking of sausages11 march 2011, 12:44
In spite of the name of this blog entrance I am not going to write on the subject of “what sausages are made of” and “the USSR collapsed when doctor sausage (a beloved type of sausage in the post-soviet space) could be bought at 2 rubbles 20 kopecks.” Although, I guess, I will have to touch on the second subject anyway.
Thirty years ago it was already becoming obvious that socialism was losing both the arms race and the economic competition. One of the popular life arguments to point out the advantages of free market for customers was to say: “You enter a grocery store and there are three hundred different varieties of sausages!”
Well, now we are living in a capitalist state. One can find enough varieties of sausages at Ramstore, Stolichniy or any other large supermarket: maybe not as many as three hundred, but one hundred varieties for sure. So what? Would you buy sausages of one hundred various types? Applying my own experience in shopping I am trying to calculate how many types of sausages have been part of my rations during the last decade and I understand that four varieties that were rotated or sometimes came in combinations plus one rarely bought raw smoked type was all I needed. I don’t think that many Kazakh citizens expanded their sausage consumption outside the limits I’ve just described. (Then raises the question: Why produce a hundred varieties of sausages? Adherents of planned economy must have been thinking in a similar way when they decided to limit the sausage assortments of the whole Soviet Union to a couple of dozens of types.)
So it turns out that availability of a huge variety of sausages is not important for most of the people, because when buying sausages a person is usually governed not by the selection range, but by completely different principles. Confidence and trust are the most important of them, I think: confidence in the quality and trust toward producer or seller.
I won’t be discussing extremities when a person’s choice in governed only by what he can afford and he simply buys the cheapest he can find, even if it is a counterfeit that can hurt his health and would in the end mean additional expenses (a cheapskate pays twice). This kind of behavior is usually an involuntary conduct, while I would prefer to draw my conclusions from more standard cases.
It is obvious enough that confidence and trust do not come out of thin air. They are results of a choice that might have been made very long ago under the influence of very different factors, a reputable advice for instance, or an observation of parents’ shopping. But the confidence and trust are so important in themselves that they are often capable of overweighting not only all available alternatives in the sausage line, but sometimes even the financial disadvantages: a person often would continue regularly purchasing the goods he is used to even if they grow in price. And only a very abrupt escalation of prices of the once beloved product can get the person to pay attention to other shelves in the shop. Same can happen if a person suddenly loses confidence and trust because of an abuse of confidence or because the once favorite good becomes morally obsolete.
Does this mean that the right of choice that is so much exalted by the capitalist ideologists is not so very important? It looks like it is indeed not so very important for people that already have a list of predilections (otherwise such concepts as brand Nazi, traditional customers and brand loyalty would not have existed). But every person has his own set sympathies, tastes differ. And this community of different people needs the liberty of choice to satisfy their tastes. The most important here is not to mix up the choices: it is the abstract overall mass of people that needs the variety of choices, but an individual consumer holds confidence and trust above everything else.
I wish you luck. And if you have thought that this blog entry has something to do with the forthcoming presidential elections, you are gravely mistaken. In truth I was trying to answer a lingering question for myself: why I like only certain banks of electric goods. Besides, I wanted to come up with a logical explanation of why the public procurement tenders are run incorrectly (their main principles are what makes things go wrong: a variety of different choices is a must and low prices are preferable. The thing is that at the same time the managers of our money are supposed to find the best ways to meet collective demands of Kazakhstan citizens at acceptable quality and via trusted suppliers).
P.S. What concerns the promised “hairdresser’s index” and the weight of economic factors in this index, it corresponds well with the written above observation that a customer is ready to pay an increasing prices for confidence and trust. My conclusion is that owners of hairdressing studios are playing a one-sided game with us. The game is called “how far will the client continue paying?” They increase the cost of their services by 100-500 and see if their regular clients keep coming? They do keep coming? Then they make the next step and increase the cost by another 100 tenge or more. And again they look, then increase, then look again… Gradually a client gets used to paying a disproportionate price and starts viewing it as something adequate… and then politicians and economists go searching for the reasons behind the groundless growth of prices. Whereas the explanation is very simple: the hairdresser needs more money… like in that old anecdote.