The Automobile Market and Product Research

We are in an information age, and consumers are using everything available to get the best deal. The US carmakers are in deep trouble, but so are all manufacturers.

The Internet allows consumers to save on average 1.5% when they buy a new car. There are two ways in which the Internet benefits buyers - surprisingly, helping them to find the best deal is none of them. First, the Internet provides information on the invoice prices manufacturers charge to dealers: this information allows consumers to bargain over the price knowing the lowest price that the dealer will accept. Second, online buying services help consumers to pool demand and exercise market power: such services can in fact threaten to avoid dealers offering higher prices. The former mechanism benefits only bargaining-averse consumers, whereas the latter benefits all consumers.

It is imperative that we allocate some of our collective purchase power to support companies who value sustainability and social justice. So some of our product research should cover factors besides price.

This might mean higher prices, for some purchases. But not all the time: choose Costco over Wal-Mart, for example. In the long run, the companies who look beyond profitability, will have sufficient demand. Look at the dollars spent on Organic produce and Fair Trade coffee. Fair Trade chocolate is staring to gain traction as well. If we spend wisely, we can replicate those successes in other parts of the consumer economy.

On the marketing side, Fair Trade companies should make sure they have an online presence. For most people Search and Search Engines are the starting point for product research or purchases: make sure you can be found in the first page of search engine results.