Now, continuing on from my last post aboutthe Corporate Mechanism (which you must read to understand this), market dominance and controlling consumer tastes, let’s go back to Ah Keat’s set of advertisements.
You will remember that Ah Keat, after attempting to increase the productivity of his company (Fashion Belts Inc.) by forcing his employees to work harder and longer for less pay, has found an edge over Colin’s company (Fancy Belts Pvt. Ltd.) in advertising his products. In the process, he has to increase the price of his goods (Fashion Belt) to pay for the extra cost of his advertising campaign.
Initially, Ah Keat advertised Fashion Belts as a luxury item for parties. He attracts only partygoers to buy his belts, but other consumers are not interested – his initial aim is to wrest control of the existing fashion market from Colin. But Ah Keat cannot afford to advertise to only a small group of people, because advertisements cost money, and the market simply isn’t big enough for him to earn back that amount. Ah Keat’s first round of advertisements does not work quite as well as he would like, so he tries something else, and starts to bring in movie stars and singers to say how cool these belts are.
Ah Keat soon realizes that after this new set of advertisements, the total sales of his and Colin’s companies has increased –Ah Kiet’s piece of the pie is smaller than before Colin came along, but the market as a whole has expanded.
How on earth did Ah Keat’s advertisements increase the market? He hires a consultant to figure out why. The consultant, after some research, tells Ah Keat that people actually want to feel like the people in the advertisements – that is, they believe wearing these belts makes them feel like movie stars, singers and the lot, so they buy them to feel cool, and as a result the market gets bigger. Ah Keat is rubbing his hands in delight – he can make the market grow by advertising, and a larger market means more earnings. He realizes also that whoever controls the market has more to earn than ever before.
It comes to a point where virtually everyone in the city has a Fashion Belt, and there is nobody else to sell to. Will Ah Keat be a victim of his own success? But Ah Keat is a sly one. He comes up with a new belt called Fashion Belt X, and sells it as the hipper, trendier and better version of Fashion Belt. But before releasing the product to the city, h unleashes another wave of advertisements to announce its arrival – and people go crazy in anticipation. Now they are being told that a Fashion Belt is not enough to feel cool at a party – the Fashion Belt X is even better! As the product hits the market, people flock to Ah Keat’s stores to buy up even more of the product, which turns out to be a cooler, better-designed version of Fashion Belt (exactly as had been promised) – and they lap it all up. Even the people who already have the old generation of Fashion Belt are compelled to buy ‘the X’ as it is soon labelled, because it’s simply too cool to ignore!
After the initial craze, as people are beginning to get comfortable in their new belts and have just locked up, thrown out or given away the old ones, Ah Keat floods the market with his next big hit – Fashion Belt Summer Season, and the hype begins all over again. Of course, Ah Keat makes big bucks while his workers struggle to pay their electricity bill, and his buyers are forced to pay extravagant prices for goods that are actually cheap to make.
Impossible, you say? Well, look around you. Have you ever been excited about the next new item of clothing or piece of technology to hit the market? Have you gone out of your way to buy these products, thinking that it would make you feel better? Has it really made you feel better? Or has it deprived you of hard-earned money, money that you could have used for something else, like paying for your college education, or having extra tuition classes, or even giving a few dollars to the beggar down the street?
I’m not telling you not to buy the next new product on the market. By all means, buy it – if you believe it is genuinely useful to you. Otherwise, why are you wasting money on something that looks slightly different from another, and has the same function as a cheaper good?
Don’t be a fool for these things. Don’t let yourself be manipulated by businesspeople like Ah Keat, who care only about money. Spend your money wisely, in a way that makes it worth the sweat shed to earn it.