K for CLIENT (customer)
09. 07. 2024
Too few people realise that the customer also has a share of responsibility. And a very important part of that responsibility. In today’s world, the customer is probably the most important regulator of the free market. Because if there is no customer, then the product does not sell, and it disappears. Simple as that. If the customer buys the product, then the product will stay and continue to be sold, even though it may be defective or, worse still, the product may be non-compliant. Is the customer nowadays even aware of this responsibility? I do not think so, at least not enough. We rely far too much on someone else to do it for us. Will it? I am not sure, at least not for all products. Just think how many supervisory institutions we would need to fully supervise all the products on the market. How many people would have to supervise thousands and thousands of products. Is that logical? Is that even feasible? Is there any trust left then? Would we want there to be full control of everything? I myself really do not want that.
Customers (at least the vast majority of them) probably do not know that most products come on the market without any supervision by any supervisory institution (i.e. an independent third-party supervisory organisation, which can also be generally referred to as a regulator). Very few products are in fact subject to a conformity assessment procedure, involving an independent institution or, in the case of conformity assessment, a notified body. Only the most safety-critical and health-threatening products are subject to mandatory product certification before they are placed on the market by the manufacturer. In the European Union, these products are CE-marked. On the other hand, the vast majority of products are placed on the market on the basis of the manufacturer’s findings, without external supervision. It could be said to be a kind of self-declaration on the part of the manufacturer. And we come back to trust. It is true that quite a few manufacturers, at least the larger ones, have obtained a production quality management system certificate (such as ISO 9001). Yet it is a fallacy that we customers think that a certificate in this case means a good product. Not directly, since ISO 9001 certification refers solely to the management system (or, more simply, to the management processes, or even more simply, to the documentation that governs the processes and is produced in those processes). Of course, manufacturers with ISO 9001 certification are more likely to have a product that meets all the requirements. But that’s all. There is a higher probability. For many manufacturers, their products have in the past been found not to meet all the requirements. Despite having obtained a number of such certifications.
It is in this respect that the supervision of products by the customer is important. That is why the customer must be critical of everything he buys. But is he? But are we really critical as customers? No, not enough. We buy superficially. We buy brands. We buy packaging. In fact, we buy everything other than content. Everything other than the product itself. Just ask yourself how you decide to make a purchase. What do you know about a product before you buy it? You go to the grocery store to buy one of the staple foods. Bread. The very choice of which shop you go to has nothing to do with the actual product you will buy. Furthermore, you choose from the available offer. But do you know what you are going to buy before you try that particular bread? You expect something on the basis of the packaging. Past experience. Recommendations. In reality, what is left for the customer? Because the customer does not have the opportunity to taste the bread before he buys it. Nor does he have any possibility of testing or otherwise assessing whether it meets the requirements (the quality of the bread, as most buyers perceive it – although this is not the most correct perception of quality). Do we actually know what is in this bread? The worst part of all this is that even the manufacturer does not know exactly what is in this bread. He, too, is just a customer for raw materials. Even he does not know what is in the raw material. How the raw material is produced and processed. In any case, things are not as critical as they may sound, because the producer must in any case ensure that the product is safe. It must therefore carry out certain tests, it must ensure at least some minimum level of protection for the customer. Yet it still happens that there is a product on the market that later turns out to be unsafe. Harmful to health, defective.
I personally have some questions about customer psychology. Why do we buy something? What convinces us? When you put the question why you buy something to different people, most of them will answer that it is because of the quality and the price. But quality is also price. Why do we think that price is a category of its own. I certainly agree that price is important, but it is by no means the most important. I hear all too often from customers that the price has to be fair. What is a fair price? The price depends on the customer or customers. Again, we come back to the fact that if a product sells, the probability of a higher price is higher, and vice versa. As long as the price does not fall below the producer’s breakeven point. The price depends solely on how much someone (the customer) is willing to pay for the product. The same product does not have the same price everywhere in the world. These products are rare. Most products are priced differently according to the environment in which they are sold. It is not just that the price is different because of the standard in a certain environment. The costs associated with the product are also different in different countries. It sounds absurd, but these are the facts. Logistics costs are different, as is the price of fuel. The cost of labour is different because expectations of personal income are also different. The cost of obtaining certification is different. We can quickly see that there are many associated costs that have a much greater impact on the price of the final product than the production price itself.
Why buy something when we all know it’s not worth that much? Is the value of a product as we perceive it a fact or just a feeling? Do we really know all the facts when it comes to pricing? I would say no. At least those who have never encountered a cost analysis of a product. All too often, we assess the price of a product on the basis of a feeling of how much something similar costs, and not on the basis of the added value that product brings. Or on the basis of our knowledge of something we used to do. It is nonsense to buy a product for a low price (cheap) and then not use it because it has no use value, it breaks, it gets used up quickly, etc. Similarly, it makes no sense to buy a product just because it has a high price. Price is not evidence, but it is certainly a good indicator. It is a rare customer who, without some knowledge of the cost of a product, has a good sense of price. What we do not know is difficult to assess, let alone judge. But we do. If we think something is too expensive, we don’t buy it, and vice versa. It is therefore very true that the price of a product depends on how much someone is willing to pay for it. The market should basically set a fair price. We customers just need to be sufficiently aware and sooner or later the price will be set at the right level.
And that’s where marketing, advertising, comes in. Often, it is the marketing that drives the price up to a level higher than the actual value added by the product. Because thousands of customers want the product, it will set the price higher than it would otherwise be if demand for the product were not so high. Supply and demand need to be in balance. After all, at the level of basic foodstuffs, this is taken care of by the State through commodity reserves. Otherwise, the price could fluctuate too much and sellers could take advantage of this. This is clearly visible in times of crisis or war. At that time, demand often exceeds supply, and the customer is willing to pay much more for a product than when supply is unlimited. The system is therefore based on not restricting competition. If there is enough competition, there will be enough supply and the price will be at least roughly fair. Of course, this also requires a critical customer who will buy products that deserve to be bought because of the added value of the product itself. And not because of an advert you have seen or a brand name. Although the strength of the brand is also an indicator that the product is good, or at least likely to be good. Because in the long run, only the best brands survive. Those brands that do something right. The ones that bring added value to the market at the right price. That solve a customer problem. That add value for the customer. I will write about one such brand in a future reflection.
Primož
Next time, 24 July 2024, LOTRIC Metrology