[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]
Re: bundling is inherently unfair to consumers
To date, I have not responded directly to even one of Lewis Mettler's
posts. As one of the few lawyers on the list, and one who also
happens to have a degree in economics, it has seemed to me to be
unsporting, like shooting fish in a bearrel. But this bait finally
got me to rise:
In <3852A62F.B448BD6D@lamlaw.com>, on 12/11/99 at 02:44 PM,
"Lewis A. Mettler" <lmettler@lamlaw.com> said:
|If I can not take aspirins (for whatever reasons) no convoluted
|logic is going to make my being forced to buy aspirins appear to
|make sense.
|What you can not get straight is that some consumers do not want
|your stupid products.
|And, there is no logic that makes sense forcing consumers to buy
|products they know they do not want.
|That is all that bundling does. It forces the sale of an unwanted
|product upon the consumer.
|Thus: "Bundling is inherently unfair to consumers and causes harm to
|almost all of them".
|It has nothing to do with theories or perspectives.
|It only has to do with whether consumers are forced to buy products
|they themselves know for a fact that they do not want.
|Idiots on this list continue to try to force the sale via bundling.
|What happened to the idea of advertising?
Bundling is one form of advertising. Period.
|What happened to the idea of allowing the consumer to decide which
|products they buy?
|Bundling is an insult to consumers everywhere.
|No one on this list is willing to give up their right to pick and
|choose the products they buy. No one. Not a single person.
<raising my hand> Exception.
|Bundling attempts to force consumers to give it up.
|But, we all demand our right decide which products we buy.
|You do too.
|If you promote "bundling" you insult consumers.
|Many on here only seek to force consumers to buy what they are
|selling. That is called promotion. Those that disagree are only
|promoting certain products and certain brands.
Mr. Mettler has repeated the vile and base canard that all those
on this list (excluding, presumably, only himself) are posting
only to try to sell some product several times with no evidence
to support it. It is, in fact, not only unsupportable by any
evidence from the content of posts on this list, but it is a
statement that I know from personal knowledge to be untrue.
Mr. Mettler knows that it is untrue, and yet intentionally and
with malice, repeats it. Intentionally repeating an untruth is
known by a very technical term, It is called "lying," and,
sometimes, "lying through one's teeth."
|They are only attempting to screw consumers by forcing the sale of
|unwanted products.
|I am not the one trying to force others to buy this or that product
|via bundling or any other means. Many on this list have that as
|their only objective. That is very clear. They refuse to respect
|the right of any consumer to decide what they might buy and use.
|It is sick.
Suppose the following hypothetical situation:
I am a producer of Product A, which differs from other like
products, but not by enough that the market behaves other than
as a commodity. In a commodity market, the price for competing
products, by elementary Adam Smith principles, is driven down
to barely enough to cover each producer's costs plus a minimal
profit margin.
Now, I can buy advertising to differentiate my product, but the
cost of advertising is a true cost, and I must raise the price
of my product in order to continue to make what (by definition
in a commodity market) already was a minimal profit. In a
commodity market, my sales will go down if I raise my price.
Some very good marketers have been able to buy advertising
sufficient to allow them to sell at a premium price compared
to equal quality products. Nikon cameras, Nike shoes, Calvin
Klein T-shirts, and Bose loudspeakers are examples. However, the
strategy is successful only _after_ an image has been created.
[In that situation, _after_ the image is created, the seller
"bundles" -- I need not use the quotation marks because the
bundling is not analogous but real -- an inchoate image with
the actual product. Is the consumer harmed by the higher price
for an effectively identical product? Not if what he or she
wants is to show off the label, not primarily to use the
product.]
Another strategy -- we shall call it the "toaster at the savings
bank" strategy -- is to give away a separate product (usually
_not_ a commodity product, but a non-commodity product which we
shall call Product B) that has less production cost than Product
A for "free." Now, I do not mean _literally_ for
"free-to-the-end-user," which is why this time I _must_ use
quotation marks. By "free" here, I mean that the producer of
Product A bundles it with Product B, which it buys at quantity
purchase cost and distributes for very little marginal cost
because the distribution chain for Product A swallows it. The
consumer price for Product A _plus_ Product B is less than the
price of Product A on the commodity market plus the price of
Product B on the retail market. The seller of Product A can get
his full margin from the sale of Product A and lose no money on
the pass-through sale of Product B, even though it makes no
profit from the sale of B. The seller makes money only from the
increased volume of sales of Product A.
This form of advertising -- and it is naught but a form of
advertising -- works best, of course, if Product B is not
available from other sources. Star Wars action figures sold
together with Big Macs are one example. In my childhood, Sky
King decoder rings sold a lot of Peter Pan peanut butter to
my family, and presumably, to a lot of others.
But that form of advertising works even with commodity products.
At one time, I did most of the legal work for the largest tire
retailer in the world. (If you do not live in the Northweat,
you likely have not heard of Les Schwab, which is larger than
the retail divisions of GoodYear and Bridgestone/Firestone).
Once a year, Les Schwab has a promotion where it gives away
"free" beef with the purchase of sets of tires. Les Schwab's
prices generally are higher than other tire retailers, but the
price of a set of tires from Les Schwab with the beef included
is generally lower than the price to the consumer were he or she
to purchase the same tiree elsewhere, plus the retail price of
the same beef -- and most consumers are not able to buy the beef
at the wholesale price.
The tires-plus-beef sale is a true bundle, unalloyed. You _can_
leave the beef behind, but why would you? If you take the
bundle, you get the bundled products for cheaper than you could
buy the tires (elsewhere) and beef (elsewhere) separately.
Now, it may be argued that Les Schwab _could_ sell the tires
alone at a lower price, and thus consumers are harmed by the
higher-than-competition prices at which Les Schwab generally
sells. That argument would ignore the indisputable fact that
(mainly because of unsurpassed service) Les Schwab is able
to sell the same tires at the same prices about 50 weeks of
the year _without_ the beef promotion. In other words, if you
argue that the consumer is harmed, then you must refute the
free and open market forces upon which capitalism is supposedly
based.
In summary, it is simply not possible to say _truthfully_
that bundling is _always_ harmful to consumers. If Mr. Mettler
persists, in the face of real-world examples, to insist that
bundling _always_ is harmful to consumers, than there is a highly
technical term for what he is doing. It is called "lying," or,
sometimes, "lying through his teeth." In that case, the jury is
instructed to weigh the testimony in accordance with the pattern
now well established.
--
-----------------------------------------------------------
"Ethical at One of One dot Net" <ethical@1of1.net>
[T. Guilbert]
sending email to you from lovely Portland, Oregon, USofA
-----------------------------------------------------------