Stop the presses: Price isn't the only measure of value

Written by Jayson Jacoby February 07, 2011 11:06 am

We published in this space in Wednesday’s edition a column that intrigued me because the author wrote about something almost all of us do regularly.

Which is to buy stuff.

It’s not only the subject of David Sirota’s column that piqued my curiosity, though.

Equally compelling is Sirota’s attempt to pass off as newfangled a facet of human behavior that most people understand is as old as the hills.

Here’s his revelation: Consumers don’t always buy the cheapest product on the shelf.

Sirota, to his credit, doesn’t take full credit for this profound discovery.

“Brandweek,” he writes, “reports that a new national survey finds that consumers are no longer ‘buying based on price alone.’ ”

Speaking of value, I’d like to know who thought it was worth so much as a nickel to commission that survey.

Its premise, to indulge in extreme understatement, has a bit of a flaw.

The implication of that statement — consumers “are no longer buying based on price alone” — is, of course, that they used to do precisely that.

Which, as anyone who’s ever been a consumer knows, is balderdash.

If that “buying based on price alone” notion had ever been the omnipotent force Sirota suggests, then every restaurant would be a McDonald’s, and every car a Kia.

(Or possibly a Yugo.)

Yet Applebee’s and Mercedes continue to prosper.

Sirota isn’t done mining that national survey for self-evident statistics, though.

He explains also that buyers “are relying more on their perception of value in everything from athletic shoes to paper towels — and businesses are now tailoring products to meet the demand.”

I took just a couple of basic economics courses in college, but I’m fairly certain that value has always been a matter of perception. And I know I’ve read somewhere that business owners, clever people that they are, strive to persuade buyers to perceive their products or services as more valuable than the competition’s.

Actually, that’s a pretty accurate description of business right there.

As far as paper towels are concerned, Bounty has stayed afloat for decades even though its product costs twice as much, or more, as the store brands.

And I doubt the burly guy in the flannel shirt, who rushes in to mop up a pool of milk or soda in the company’s commercials, is the only reason a goodly number of customers consider Bounty to a better value, despite the dear price, than its comparatively flaccid competitors.

The centerpiece of Sirota’s thesis, though, and the one he cites at the start of his column, involves the computer industry.

He points out that Apple Inc. earned record profits in the first quarter of 2010.

“The news that Apple has become a bigger market force than Microsoft may go down as a positive watershed in American consumer history,” Sirota writes, “a paradigm shift in which buyers began choosing value and quality over bargain and volume.”

Firstly, Apple’s profitable quarter hardly vaulted the company above Microsoft as a “market force.”

Microsoft’s operating systems still capture about 89 percent of the U.S. market, which is rather larger — more forceful, you could say — than Apple’s 11 percent.

Secondly, it’s sales of iPods, iPhones and iPads, not Macs, that is bolstering Apple’s bottom line. The share of the company’s profits derived from Mac sales dropped from 46 percent to 24 percent between 2008-10.

Sirota would have us believe, based on three months’ of sales data, that consumers, having come to their senses on that antiquated “buying based on price alone,” idea, have begun a mass migration from shoddy but cheap PCs to the magnificence of Macs.

Yet a large majority of computer buyers continues to choose PCs, which are on average half as expensive but, according to Sirota, less “reliable and intuitive” than Apple’s products.

Finally, Sirota’s description of buyers suddenly “choosing value and quality over bargain and volume” is so general and simplistic that it’s meaningless, and even a trifle silly.

There has never been such a creature as the “American consumer,” at least in the homogeneous sense that Sirota implies.

This conceit is as trite as the “American people” whom politicians are always prattling on about, as though the 300 million of us could ever agree about anything.

Every consumer is an individual, and each purchase each of us makes is a separate transaction.

Maybe I buy Hamm’s because it’s cheap, but my neighbor thinks it’s a tastier brew than the trendy craft beers.

To return to the computer industry, no credible reader believes that vastly more people buy PCs rather than Macs because of the former’s “volume.” The truth, of course, is that PCs outnumber Macs, by many millions, because a whole lot of consumers decided PCs are a better value.

This simply wouldn’t happen were the gap in quality between the products as gaping as Sirota suggests.

Sirota further weakens his case by quoting from a New York Times article which contends that moviegoers are tired of shelling out money to watch Hollywood schlock.

Really?

I’d entertain an explanation, then, for why both “Angels & Demons” and “The Hangover” ranked among the top 10 highest-grossing movies in 2009.

The bigger blemish on Sirota’s logic, though, is that he’s assembled such a dog’s breakfast of evidence to bolster his claim that Americans finally appreciate quality in the products they buy.

Comparing movies with computers, sneakers and paper towels is not, as the cliche goes, merely putting apples against oranges — it’s putting apples against, say, cadmium and sunsets.

The box office tally might tell us something about Americans’ artistic tastes, but it has nothing at all to do with why we choose a particular brand of computer.

Ultimately what I inferred from Sirota’s column is his seeming disdain both for certain corporations — Microsoft is his chief target in this instance — and for the intelligence of most Americans.

Or at least those of us who buy things occasionally.

Of Apple he writes: “In many ways (the company) is the antithesis of the typical multinational firm.”

One of those many ways not being, apparently, building its products overseas, as Apple does.

Sirota goes on: “Where many corporations sacrifice craftsmanship and customer service on the altar of low price, Apple does the opposite.”

He’s implying that the makers of PCs sell junk, and that the multitudes who buy their products are dolts.

I’ve owned Macs, and I’ve used one at work, exclusively, for almost 20 years.

I like Macs. A lot.

My home computer is a Lenovo laptop. We bought it a year ago. It’s the first PC I’ve owned and used regularly.

It has performed flawlessly.

In its ease of use it reminds me of a Mac — as high a compliment as I can pay to a computer.

That the Lenovo cost less than a comparable Mac makes it a good value as well.

But then again my opinion probably ought not be trusted.

After all, I have bucked the trend for buying smart rather than buying cheap — the trend Sirota deems “an economic transformation that’s long overdue.”

Worse still, I sometimes drink that swill that comes from the land of sky blue waters.


Jayson Jacoby is editor of the Baker City Herald.