Bargains

The only way you’re going to stop constant pressure toward cost and price reduction – which includes the “outsourcing of jobs” – is to convince consumers that bargains aren’t cool, that they are wrong to look for the lowest possible price on a given item. Considering that this isn’t rational: good luck. Rob Walker discusses the $29 DVD player in NY Times Magazine:

When we talk about ”aspirational” shopping, we tend to mean the process of buying slightly above our true stations in life — using consumption to get a little piece of luxury or pleasure. But these are not the only values that motivate us as shoppers. For instance, everybody loves a bargain. Bargain culture, says Sharon Zukin, a sociology professor and the author of ”Point of Purchase,” a book about shopping and America, is based on ”a kind of aspirational shopping for the lowest price, rather than the highest status.”

To understand how powerful that urge can be, don’t think about multipacks of paper towels or huge jars of mayonnaise. Think about DVD players — specifically, Apex DVD players. Of the 31.1 million DVD players sold last year, roughly 10 percent were Apex models, according to the NPD Group, the retail tracker. That puts the brand in second place, just behind Sony, but the two companies could not be more different. Sony is a storied innovator, a name familiar to consumer-electronics buyers for decades as a technological leader. The Apex name — for those who even notice it — has been around for about five years and basically means ”bargain.”

The Apex AD-2600 ”entry level” model goes for about $60 on Amazon.com, compared with $100 or more for a similar Sony model. This is how the Apex DVD player fits into the bargain-culture tradition that Zukin traces back to the five-and-dimes of the 1870’s. Long before Costco and Wal-Mart and online discounters, stores like Woolworth’s aimed at consumer rationality by displaying copious supplies of basic products at the lowest prices. ”Shopping at a discount store appeared to be both thrifty and modern,” Zukin writes. These are values, she adds, that were (and remain) ”at the core of bargain culture.”

….Globalized production strategies, however controversial they are in the political realm, have thrown bargain culture into overdrive, converting luxuries like cashmere and high-tech gizmos into affordable commodities with astonishing speed. Based in Ontario, Calif., Apex Digital was founded by two immigrants from China and Taiwan and is a thoroughly global operation: all the DVD assembly is done by subcontracted workers at a factory in Jiangsu, China, where labor costs are low. Apex has only about 100 employees on its payroll, most of them in California.

….Last Christmas the Deal was often a DVD player marked down to an absurdly cheap $29, and that DVD player was often an Apex model.

….The Apex consumer seems to trust not a famous name or a chatty salesman or corporate advertising (Apex does none), but rather other consumers: the hive mind, or the will of the mob, depending on how you look at it. ”It’s kind of like the stock market, or the primary campaigns — the issue of electability,” Zukin says. ”You’re betting on other people’s responses.” The more people buy Apex players (and jostle one another at stores to get at them), the more it seems downright unthrifty to buy anything else.

Walker doesn’t mention that tis impulse also underlies file sharing: “What is the cheapest available price on music?” “Free.” “Okay then.”

Except it isn’t really free: there are costs in computer equipment, access to the Internet, the inconvenience of pop-up ads, spyware and viruses, the unreliable quality of shared files, etc. What the music industry should be doing right now is pricing their products closer to free, and convincing customers that a small price for quality and reliability (as well as good karma) is worth paying against the costs of “free.” but we haven’t seen much of that yet.