The Internet – creating the perfect market economy?

Nottingham's old market square
Nottingham's perfect market economy in the old days - if a seller sold bad product - everyone knew

I’ve written a few pieces recently about consumer power (and blogger power) and wonder whether we are reaching the position of a perfect market economy. That is the previously theoretical situation, where all the buyers having all the information to buy identical products.

When I studied economics at school the section I was most fascinated with was the perfect economy.

And I think that we’re almost there, because that’s the Internet now isn’t it?

All the buyers have all the information and almost all retailers are selling identical products.

And, as the theory of the perfect economy states, if all the buyers have all the information and the market is selling identical products, then people will always buy from the lowest price supplier. This has to be true, doesn’t it?

Well, no. they’ll buy from the one they trust the most, as long as the price is there or thereabouts.

My mate and business guru Andy Hanselman once said to me that ‘advertising is the price you pay for being mediocre’.

He’s right.

Products and services rise from mediocrity by being exceptional, by being differentiated and by being well branded.

So rather than the internet killing brands, it’s offering them the most incredible opportunity. A world at their feet, that’s theirs for the taking.

It’s the perfect market opportunity.

A version of this article was first published as The Perfect Economy and branding? on Technorati.

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5 thoughts on “The Internet – creating the perfect market economy?

  1. John – I am not sure that the internet does provide the ‘perfect market’. The foundation stone of what you are driving at is ‘perfect information’ I think. And the internet probably has all of the information – but can you find it? You rely on Google – but how often do you get pointed at things that are sponsored? Or find you are at another aggregation site? This isn’t perfect information. How much time can you waste trying to pin down that perfect information? And look what happened when you thought you had it on the TV’s – it turned out that there was a minute difference in the models you were trying to compare – and some would say you are (marginally) above average intelligence – so if you didn’t spot it….

    1. I agree that it’s not quite perfect yet, but with red laser and other barcode scanning products, you can stand in Tesco and see whether they are as cheap as Amazon for things like Box sets etc.

      We did this the other day and bizarrely it was cheaper on both Tesco Direct website and Amazon by some margin – so we bought it from Amazon – who offer free delivery anyway, whilst standing in a Tesco store.

      It’s all very exciting for the shopper and tough news for the retailer.

  2. The future looks bright for us as we’ll benefit from increasing levels of value for money. The losers are the non internet users (namely the old) – who have to buy from companies with completely different business plans.

    It drives me mad when my parents choose their holidays by walking into a travel agents and asking the agent what their options are!

    I’m so brand loyal to amazon it’s unbelievable, partly because their range is so vast (including every book ever made available used), but also because I believe that they have too much to lose to not offer us the cheapest products.

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