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What if every man were Ralph Nader?

The typical American now spends 9 percent of his or her nonworking, nonsleeping time gathering information about products, according to studies by sociologists and media specialists. That comes to approximately 950 hours per year per family, or about four hours of information gathering for every $100 spent. The single most visible component of this figure is approximately 18 percent of network and cable TV time devoted to advertising. Americans spend more than 30.6 billion hours watching TV ads every year. Studies show that most consumers find a majority of these ads a nuisance--if only because the ads they see are often the same ads they've already seen dozens of times before or are for products they'll never want.

Not included in these figures are the frustration, lost time, and maybe even poor health resulting from making an ill-informed purchase....

... The problem of consumer confusion isn't the problem of buying the wrong toaster, annoying as that might be. It's a problem costing the economy billions of dollars in waste and billions of hours in lost time, not to mention the immeasurable suffering and loss of useful products resulting from people's inability to cost-effectively judge the quality of the vast variety of products and services.

Resolving the advanced industrial world's consumer-confusion problem will require a paradigm shift in thinking. First and most importantly, it will require recognizing the existence and extent of the problem; that is, the loss of money, time, energy--even health and happiness--that results from making uninformed buying decisions. Second, it will require substituting an Information Age consumerism for the present, outdated Industrial Age consumerism.

Advanced countries need a new consumerism. This new form of consumerism should not be based on direct government regulation of business, as the United States does through the Federal Trade Commission or through state consumer-protection offices. Rather, it should be based on a high-quality information infrastructure that will revolutionize the private-sector economics of selling information to consumers.

The problem with the old consumerism is that government is an inherently inefficient and inept arbiter of the marketplace. Under the old consumerism, regulations multiply, become very expensive and impractical to enforce, and, unless curtailed, frequently do more harm than good. This old consumerism wouldn't be necessary if the mass media were completely effective in their avowed role as watchdog and informant. The problem is that the mass media, based on outmoded technology and riddled with inherent inefficiencies and conflicts of interest, have been only modestly effective in this role.

The significance of the new information infrastructure is that it makes it profitable for independent information sources to provide high-quality, convenient, and affordable information to consumers, thus becoming the critical arbiters in the consumer's day-to-day decision making. Ultimately, what this infrastructure means is that, wherever consumers are and whatever they are shopping for, they will be able to painlessly and affordably ask what amounts to a trusted, expert "friend" what to do.

In a sense, these independent information sources will empower the average consumer to access knowledgeable opinion about purchases in the same way that senior executives routinely do today. That is, consumers will be able to designate agents to make their decisions just as executives can designate subordinates or outside consultants. As a result, consumers will be able to make decisions as efficiently and knowledgeably as Corporate America can.
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Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:need for a new consumer information infrastructure
Publication:Financial Executive
Date:Mar 1, 1993
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